The proportion being ~100%? Then they can move on and suck some other company dry.

On the other hand, short-term shareholders, inasmuch as they prefer returned capital, are then freed to invest in other businesses.

If PayPal et al. had retained profits in the business for a long term goal, a substantial number of innovate companies couldn't have formed.

The more nuanced problem is likely that short-term and long-term shareholders' goals are mutually exclusive. That is, there is a rarely a strategy that's optimal for both.

Coupled with the fact that some businesses (apps!) favor short-term strategies, while others (biotech!) favor long-term strategies.

> On the other hand, short-term shareholders, inasmuch as they prefer returned capital, are then freed to invest in other businesses.

I'm not sure that's a benefit if they then destroy those businesses too.

Not all businesses are productive. Look at a few decades of Japanese economic history.

If capital is tied up in a failing business that's pursuing a "long term strategy," then it's not freed for new businesses.

SpaceX and Tesla (to name two HN faves) probably wouldn't exist had PayPal retained more of its capital.

One solution might be for shareholder votes to be weighted by the length of time they commit to hold the shares.

If you need money over the long term and you don't want to relinquish control, we have a thing called the bond market. Borrow for 5, 10, 30, heck, even 99 years and your interest is tax deductible! (Borrowing longer than 99 years the IRS may want to talk to you. Your bonds start to look like preferred stock.)

Wait -- the bond market won't lend to you cause they don't trust your ability to generate that return for the next 20 years? Go to the junk bond market -- they'll lend to you. In fact here's an idea go to the junk bonk market, and borrow money to take your company private -- out of the hands of those grubby short term shareholders.

The public markets aren't just designed to maximise shareholders value. Maximising shareholder value is supposed to be a means to maximising societal value. If the shareholder model isn't doing that then it isn't fit for purpose.

The perpetual, limited liability enterprise as legal person, owned via tradeable claims on equity, managed by professionals distinct from the owners, what we call modern financial capitalism, has been a boon to the world. Obviously it’s not the only way one could organize productive endeavors. But it’s pretty well understood that it produces greater long term economic growth than any other competing system. It has known shortcomings, but maximizing shareholder value is a really good solution for the agency problem introduced by the creation of a non-owner managerial class.

> it’s pretty well understood that it produces greater long term economic growth than any other competing system... It has known shortcomings.

I mostly agree that it's better than other system that we've tried in the past (although I'd argue that the more highly regulated capitalism with higher taxation levels of the 60s-80s was slightly better than our current (post-90s) deregulated system).

But I'm a bit more ambitious than you. I don't think we should rest on our laurels and accept the known shortcomings. I think we can do better, and I think we should actively look at doing so.

I feel like maximising shareholder value is a mediocre solution to the problem introduced by the creation of a non-owner managerial class. I'm not entirely sure what the best solution to the problem is, but I'm convinced that we need a better one than the one we have.