The Shareholder Value Myth (2013)

Re:The Shareholder Value Myth (2013) by crazygringo on Saturday July 14, 2018 @11:28PM (#17533654)

> What’s more, directors viewed themselves not as shareholders’ servants, but as trustees for great institutions that should serve not only shareholders but other corporate stakeholders as well, including customers, creditors, employees, and the community.

Citation needed. This sounds like rose-colored glasses to me. I don't believe such a golden age ever existed.

> Nor was share price assumed to be the best proxy for corporate performance.

Since when have shareholders cared about anything except getting rich?

> Many corporations formed in the late eighteenth and early nineteenth centuries... They structured their companies to make sure the business would provide good service at a reasonable price – not to maximize investment returns.

Somebody tell the robber barrons this? They apparently didn't get the message.

> It was once believed (at least by academic economists) that the market price of a company’s stock perfectly captured the best estimate of its long-term value. Today this idea of a perfectly “efficient” stock market has been discredited...

Citation needed again. Because if anybody has a better idea of how to judge companies' long-term value, then they'll become extremely, extremely rich.

I'm sorry, but this article is absolute nonsense.

There are valid reasons why one might argue that the end goal of corporations shouldn't be to maximize shareholder value, and how governments should create policies towards that end, but this article doesn't even begin to touch on them...

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Re:The Shareholder Value Myth (2013) by learc83 on Saturday July 14, 2018 @11:58PM (#17533717)

>Many corporations formed in the late eighteenth and early nineteenth centuries... They structured their companies to make sure the business would provide good service at a reasonable price – not to maximize investment returns.

>Somebody tell the robber barrons this? They apparently didn't get the message.

Your ellipses left off the qualifiers. The author isn't talking about all companies. They are specifically talking about companies that were founded in part to provide services for investors as opposed to just return on investment--companies where people invested because they wanted the company to exist so that they could be customers. There's even a citation for this in the foot notes.

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Re:The Shareholder Value Myth (2013) by CamTin on Sunday July 15, 2018 @11:33AM (#17535639)

Pre-breakup AT&T is a tangible example for people old enough to remember. AT&T shareholders certainly did well with their monopoly position, and the early days of the Bell System were certainly not public-spirited (the company directors were Yankee misers in the mold of Venderbilt, though not on as grand a scale), but eventually the Bell System became, as a regulated monopoly, not appreciably different from any other arm of government. The Bell System breakup was roughly equivalent to a privatization of a national industry ala British Rail rather than a trust-busting ala the Standard Oil breakup.

There is an excellent John Books (of /The Go-Go Years/, among others) tome on the subject, published just before the breakup: https://www.goodreads.com/book/show/1323717.Telephone

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Re:The Shareholder Value Myth (2013) by usrusr on Saturday July 14, 2018 @11:46PM (#17533691)

> Since when have shareholders cared about anything except getting rich?

How about staying rich? The idea of providing non-trading shareholders with a reliable stream of dividends for the rest of their lives is very different from that of looking good in fashionable metrics to maximize stock price now.

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Re:The Shareholder Value Myth (2013) by crazygringo on Sunday July 15, 2018 @07:40AM (#17534799)

To repeat what I said above: if you can figure out how to distinguish those two, then you'll become extremely, extremely rich. Good luck! :)

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Re:The Shareholder Value Myth (2013) by phkahler on Sunday July 15, 2018 @09:18AM (#17535117)

>> > Nor was share price assumed to be the best proxy for corporate performance. >> Since when have shareholders cared about anything except getting rich?

You get rich by taking the profits of the company through dividends. Anyone trying to get rich from selling the stock is playing the greater-fool game.

Share price is nice, but it's not the best game to be playing.

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