Is the status of the publicly quoted company in permanent decline? The relationship between company shareholders and company directors certainly appears to be in a state of flux, if not downright crisis. Sir Nigel Rudd pointed out this trend when he presented the ACT Winter Paper, sponsored by Barclays Capital. Looking back on his career, Sir Nigel praised the treasury profession, saying that it was only when his group Williams first appointed a treasurer that it had struck him how off the pace the company was at dealing with the banks. But Sir Nigel was more interested in looking forward to dangers ahead. Over the first half of 2007 – before the business pages and the economy were engulfed by the credit crisis – a torrent of abuse was directed against the private equity industry, a source of finance portrayed by some as little more than tax-avoiding asset strippers. Few treasurers would recognise or concur with that description. In fact, the idea is now being promoted that a private equity owner has distinct advantages over a set of troublesome shareholders and a provocative media that are routinely encountered by public companies. Would the chairman or chief executive of a business prefer to be subject to the scrutiny of an owner or the City editor of the Daily Mail? The argument gaining currency is that private equity owners care more about the medium to long-term success of the business than do some shareholders of public companies. Too often, the latter are in for a quick buck and will wreck the business on the way if that is what it takes to extract the maximum profit in the shortest timescale. There are recent examples of chief executives falling into trouble because of their desire to react positively to the radically different demands of a changed shareholder base more focused on short-term price advantage than long-term value. The changed behaviour is a significant departure from the days when a company’s chairman or managing director knew that the long-standing shareholders were interested in, and concerned about, the business and its strategy. Of course, shares have always been traded for short-term as well as long-term gain. So it could be said that directors of big business complaining about the relationship they have with their shareholders is not a new phenomenon. But what is intriguing is the idea that some shareholders no longer see themselves as owners of the companies in which they hold shares. The emergence of such a trend poses a serious threat to the public company. PETER WILLIAMS Editor