Summary
A new survey by the Rock Center’s Professor David Larcker and Brian Tayan reveals Berkshire’s management style.
For many companies, there’s a bit of magic to being bought by Warren Buffett’s Berkshire Hathaway. The company’s “Powerhouse Five,” its largest noninsurance businesses, recorded $12.4 billion in pre-tax earnings last year, up nearly 13% from the previous year. Its smaller companies also grew, increasing 8% over the year.
Of course, not all his bets have paid off (think Tesco and Dexter Shoe). But from an outsider’s perspective, Berkshire’s strategy has been a wild success. Using market returns, shares gained a cumulative 1,826,163% since Buffett took the reins in 1965.
But what does it look like from the inside? Stanford Graduate School of Business professor David F. Larcker and Stanford GSB researcher Brian Tayan surveyed approximately 80 Berkshire subsidiary CEOs to determine how Buffett’s acquisition and management style translates on the ground.
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