Opportunity costs at Olive Garden.

Olive Garden restaurants don't pay rent to the parent company, Darden.  This raises the question as to whether the true opportunity cost of the real estate that the restaurants sit on is being fulling realized.

http://www.vox.com/2014/9/18/6343665/starboard-olive-garden

The situation has has come to a head now that an activist investor has replaced the entire Board of Darden restaurants in order to effect a change.  

This is a great example of corporate governance and capital budgeting interacting.

Prediction:  Fewer Olive Garden restaurants.

Want to increase firm value? Put an academic on the board

Interesting paper that finds that firms with academics on their boards are more profitable.

This research is part of a large literature that looks at the role of the Board of Directors in affecting firm value.  In general this research finds that outside directors (those not affiliated with the firm) provide better governance than insiders.   This paper goes one step further by showing that if those outside directors are B-School academics - the governance effect is even stronger.

Via: Marginal Revolution