[Iron Eagle]

This would require me to write a very long book. However, the writer confuses a few concepts. maximizing share-holder value is a fiduciary duty of any corporation. it's not an option. HOW we maximize value is optional. Some do so by focusing on short-term stock gains and profits, over long-term company products. Some do so by focusing on quality, building loyal customers and trusted brands. Some focus solely on pricing opportunities and cost. Some do so through social efforts — going green, etc. All of these corporate strategies are aimed at Maximizing shareholder value — just in different ways and over different periods of time. In so doing, they give prospective shareholders a menu of investment opportunities, so that prospective shareholders could invest in different companies with different strategies to diversify their holdings.

[Thane_Banquo]

However, the writer confuses a few concepts. maximizing share-holder value is a fiduciary duty of any corporation. it's not an option. HOW we maximize value is optional. Some do so by focusing on short-term stock gains and profits, over long-term company products.

This is the crux of the matter. Maximizing shareholder value shouldn't be seen as the same as maximizing the short-term increase in stock price. Maximizing shareholder value means maximizing the present value of future expected cash flows. Let the stock market do what it wants to do. Stock markets are by nature short-sighted and inefficient (no one can convince me of the EMH).

However, today most folks don't get the difference, so the focus is on short-term tricks, gains, etc. to boost share price, and these actions often sacrifice long-term value. CEO's of today's publicly traded companies are obsessed with what stock analysts have to say about the value of their stock, not with actually maximizing present value.

[RatRipper]

I was thinking along the same lines as you. US companies have placed way too much emphasis on short-term profitablity to the detriment of long term financial health and stability. That did not start yesterday. Unfortunately, that is encouraged by the ability to attract capital in the markets - Wall Street. Wall Street thrives on the volatility caused by short-term thinking. . . short-term thinking also has contributed to the societal rot that we are experiencing as well. Conservatism is genarally a far superior way of thinking and behaving whether you are talking about politics or finance, IMHO

[Sam Gamgee]

I agree, and I see a couple issues to cover from this article.

1) Something crooked this way came into the corporate world that saw CEOs walk away with 100 million in options just for doing their damn job.

2) I cringe when corporations get into social causes. There job is simply create profits for the owners. End of story.