By: John Gray

As Livent’s largest shareholders and highest paid executives, prosecutors argue that Drabinsky and Gottlieb had the most to gain by the alleged fraud at the theatre company. “On that simplistic theory, every CEO and President of every major coporation has motivation to defraud the company to which they owe a fiduciary duty,” the defence argues.

Unfortunately, that simplistic theory has proved to be true all too often.

But Greenspan goes on to argue that Drabinsky and Gottlieb had to motive to falsely report higher corporate profits, because Livent shareholders didn’t really care about that sort of stuff. They were much more interested in the good reviews that the company’s shows received in the New York Times. And Livent’s stock did go up after positive reviews of Ragtime were published in Toronto in 1996. The company’s stock dipped after negative reviews of the show appeared in the New York Times in 1998 and Livent shares barely moved after it announced a $30 million loss in the first quarter of 1998.

Still, this may be the fist company in history whose shareholders didn’t seem to care about profits. After all, didn’t the shareholders think that positive reviews would eventually translate into profits somewhere down the line?