Zuckerberg’s inexperience in corporate governance may hamper Facebook success: Analysts

Washington - Facebook founder Mark Zuckerberg’s lack of experience in corporate governance may raise red flags among those who are considering investing in the massive social network, analysts have said.

 â€œHe’s just a kid. Most people at that age aren’t expected to understand corporate governance subtleties. To try to remake him overnight into a corporate executive is a bit of a stretch. He’s a kid who is smart and skillful and lucky, but he’s not a corporate executive,” Fox Business quoted Endpoint Technologies President Roger Kay, as saying.

According to a Wall Street Journal report, the company’s board of directors were just “told, not consulted” on the company’s plans to acquire photo-sharing service Instagram for one billion dollars.

 â€œThe board is there as a buffer between the investors and management. The board is supposed to give their stamp of approval for major strategic decisions and give investors a greater sense of assurance,” Jeffrey Cohn, who advises boards on CEO succession issues, said.

“He’s the entrepreneurial startup guy who doesn’t think about profits and shareholders. He thinks about the next innovation that keeps his product hot. He’s still running the company like it’s a startup,” Drexel University Finance Professor David Becher
said.

The comments come ahead of the Facebook IPO, which is likely to value the company at up to 100 billion dollars.

Analysts also have legitimate questions about whether or not these corporate governance concerns are making the company's shares more risky.

“If I were looking at it as a long-term holding, I would be concerned. While it’s not a near-term issue. You need to discount the company on that issue,” publisher of The Boardroom Insider Ralph Ward said.