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When a rising stock price can hide trouble in the company

A focus on stock price can mask a longer- term decline in a firm's financial footing
Wednesday, October 16, 2013 - 06:00

'Value myth': Bernard Ebbers of WorldCom. The case demonstrated clearly that a higher stock price does not always reflect real economic value. - PHOTO: BLOOMBERG

[NEW YORK] When a company receives criticism about its executive pay practices, a typical defence is to cite a rising stock price as justification of its pay. If total shareholder return is up, the theory goes, stockholders have no right to complain about what might otherwise look like outsize

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