Re:Americans Own Less Stuff, and That’s Reason to Be Nervous
by smallnamespace on Tuesday August 14, 2018 @12:06PM
(#17759158)
> this doesn't account for brand and a wish to protect reputation
While the preservation of a brand might be rational for a corporation as a whole, it might be somewhat easy for executives that are paid quarterly and annual bonuses to temporarily goose profits by sacrificing long term reliability and brand (which only shows up with a long lag time, years down the road), then take their bonuses from investors before going somewhere else.
This theory of 'looting' by executives might leave both customers and long-term investors worse off, but is caused by the inability of customers and investors to perfectly incentivize (or monitor) long-term decisionmaking.
While the preservation of a brand might be rational for a corporation as a whole, it might be somewhat easy for executives that are paid quarterly and annual bonuses to temporarily goose profits by sacrificing long term reliability and brand (which only shows up with a long lag time, years down the road), then take their bonuses from investors before going somewhere else.
This theory of 'looting' by executives might leave both customers and long-term investors worse off, but is caused by the inability of customers and investors to perfectly incentivize (or monitor) long-term decisionmaking.