Why a great company can be a bad investment

INVESTORS deciding where to deploy their money ask questions that are familiar: How fast is the company growing? What are its margins? How strong is its balance sheet? What is the valuation?

But before looking at the price-to-earnings ratio, perhaps we should ask: Who is really in control?

A good business is not necessarily a good investment. Investors should consider the quality of a company’s governance as part of the risk-return equation, rather than treat it as a footnote to financial analysis.