Share Buybacks - another Problem

The motives behind share buybacks - and their positive/negative consequences - have received much attention during the recent past. But one aspect that is neglected is the treatment of losses when shares are bought back at ever-rising prices and the share price subsequently declines. It appears that current accounting rules allow these notional losses to disappear in a black hole. While this may be within the rules it still prevents management from being taken to task for a failed policy. Basically it allows companies to squander the shareholder's equity worth without punishment. Money gets redistributed from the majority of continuing or permanent shareholders to those who have cashed out at elevated prices.

Millstein on Corporate Boards

Given that Corporate Boards are the immediate authority tasked with supervising and guiding a company's management one could argue that dysfunctional boards are the root of all evil in the corporate world.
So I have some sympathy with the general drift of this article (Fortune, What's behind Corporate Scandals?) but one is also left with the feeling that while we can easily point to problems it is much more difficult to come up with solutions.
General exhortations for boards to become 'better', more 'hard-working' etc are very well, like Sunday prayers, but they are of no practical use.
Any suggestions?
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