Let's tear down the idol of 'shareholder value'
It does more harm than good and can blind people to more important goals
"MAXIMISING shareholder value" is one of those concepts that falls under the adage, "Be careful what you wish for." I know this because a long time ago, I was one of those wishing for it.
It seemed like such a good idea at the time, back in the late 1970s and 1980s. For too long, the compensation of top executives was disconnected from any performance criteria, including whether they made money for shareholders.
CEOs did pretty much whatever they wanted, with no fear of consequences. Thus, companies that needed to slim down, wouldn't. Companies that needed to deploy capital more intelligently, didn't. Executives who should have been fired, weren't.
BT is now on Telegram!
For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes
Companies & Markets
BNP Paribas beats estimates as lower costs offset trading slump
TikTok ultimatum puts US firms in firing line for China response
Toyota and Nissan pair up with Tencent and Baidu for China AI arms race
BHP targets Anglo American in bid valuing miner at US$39 billion
FTSE 100 hits record high on big mining M&A, earnings push
Hermes Q1 sales jump 17% on strong China demand