RE:RE:RE:People need to relax a bit Increasing shareholder value is NOT the best strategy for management, as shown in the following extracts from Forbes magazine:
Two distinguished Harvard Business School professors–Joseph L. Bower and Lynn S. Paine— declared in Harvard Business Review that maximizing shareholder value is “the error at the heart of corporate leadership.” It is “flawed in its assumptions, confused as a matter of law, and damaging in practice.” Bower has long held this view: back in 1970, he told NPR that maximizing shareholder value was “pernicious nonsense.”
Jack Welch, who in his tenure as CEO of GE from 1981 to 2001 was seen as the uber-hero of maximizing shareholder value, has been even harsher. In 2009, he famously declared that shareholder value is “the dumbest idea in the world. Shareholder value is a result, not a strategy... your main constituencies are your employees, your customers and your products. Managers and investors should not set share price increases as their overarching goal… Short-term profits should be allied with an increase in the long-term value of a company.”