REAL WORLD EVENT DISCUSSIONS

Do companies go too far to please their shareholders?

POSTED BY: NIKI2
UPDATED: Friday, March 22, 2013 06:36
SHORT URL:
VIEWED: 643
PAGE 1 of 1

Thursday, March 21, 2013 7:20 AM

NIKI2

Gettin' old, but still a hippie at heart...


With the Dow breaking records left and right while the economy limps along and wages stagnate, I found this interesting:
Quote:

With stocks near record highs and Wall Street smiling again, here's a counterintuitive idea about the value of those shares: Investors suffer when a company focuses too much on pleasing them.

By trying to boost their stock price in the short term, companies undercut their performance in the long term, says Lynn Stout, a Cornell Law School professor and author of "The Shareholder Value Myth: How Putting Shareholders First Harms Investors, Corporations, and the Public." They spin off divisions, buy back shares, and cut costs at the expense of research and development. It's like fishing with dynamite, she says: It gets quick results but spoils the pond.

Take Kraft. The longtime corporate icon unexpectedly split itself into two, creating Kraft Foods and Mondelez last year, in a move applauded by hedge funds and others who'd been clamoring for higher share values. But the two companies have stumbled along since with little change in their stock prices. They reported poor earnings in February.

the face of a volatile stock market and lackluster returns over the past 15 years, socially responsible investors say companies need to temper concern about shareholder value with attention to the environment as well as their workforce and community. In theory, this so-called triple-bottom-line approach should minimize the risks of unforeseen labor or environmental problems and boost profitability. The challenge is that in practice it's very hard for management to keep a long-term perspective – and the results don't always show up in share prices.

"It's difficult because the long term is long, and it can be very hard to keep your hands off [potential] short-term profits," says Steven Lydenberg of Domini Social Investments in Boston.

It's also hard for investors to take the long-term view. Some may worry companies are too willing to sell the geese that laid their golden eggs in a bid to grow market capitalization. But they also don't want to be left behind every time others harvest short-term profits. An LPL Financial analysis found that the average holding period of a stock has fallen from eight years in the 1960s to around five days in 2012. Much more at http://www.csmonitor.com/Business/new-economy/2013/0316/Do-companies-g
o-too-far-to-please-their-shareholders?nav=87-frontpage-entryBloglist


I found that a nice ray of logic in an otherwise way-too-short-sighted world, and wish this kind of logic was more visible in the business world. It's something I've decried around many issues confronting us, that we're all too quick to focus on the short term and the "devil take the hindmost".

NOTIFY: Y   |  REPLY  |  REPLY WITH QUOTE  |  TOP  |  HOME  

Thursday, March 21, 2013 10:21 AM

NEWOLDBROWNCOAT


Liberal economists have been bemoaning the fact that companies always take the short-term view over the long-term view, for ever. I remember hearing that when I studied Econ. in the 1970's.

They been doing it forever, people been complaining about it forever. A very few companies, in a very few situations, have done otherwise, and succeeded.

But the shareholders are only interested in the return this quarter. If there isn't one, they'll sell, and next quarter, be ex- shareholders.

NOTIFY: Y   |  REPLY  |  REPLY WITH QUOTE  |  TOP  |  HOME  

Thursday, March 21, 2013 10:48 AM

JONGSSTRAW


The shareholders ARE the company. The Board of Directors, Management, and Staff only serve at the pleasure of the shareholders. If they don't deliver maximum or at least projected profits they're out on their ass.

NOTIFY: Y   |  REPLY  |  REPLY WITH QUOTE  |  TOP  |  HOME  

Thursday, March 21, 2013 11:36 PM

NEWOLDBROWNCOAT


Quote:

Originally posted by Jongsstraw:
The shareholders ARE the company. The Board of Directors, Management, and Staff only serve at the pleasure of the shareholders. If they don't deliver maximum or at least projected profits they're out on their ass.




In a publicly owned company, they are. However, I have worked for privately owned companies, some of them fairly large. Since the owners financed them with their own money, or made private financial arrangements, there were no shareholders. Since " the shareholders are the company", and the companies had none, did these companies not exist?

Logic flaw in yer argument there, dude...

NOTIFY: Y   |  REPLY  |  REPLY WITH QUOTE  |  TOP  |  HOME  

Friday, March 22, 2013 2:53 AM

KWICKO

"We'll know our disinformation program is complete when everything the American public believes is false." -- William Casey, Reagan's presidential campaign manager & CIA Director (from first staff meeting in 1981)




Ask the CEO of Starbucks if he goes too far to please his shareholders. I think you might get an eye-openingly frank and refreshing answer.


Quote:


Starbucks CEO Howard Schultz continued to defend his company’s support for marriage equality at a shareholders meeting Wednesday, pointing out that “not every decision is an economic decision.” Shareholder Tom Strobhar suggested that the company’s stock dipped a bit when the National Organization for Marriage launched a “Dump Starbucks” boycott last year, but Schultz expressed no concern about the company’s viability moving forward:

STROBHAR: In the first full quarter after this boycott was announced, our sales and our earnings — shall we say politely — were a bit disappointing.

SCHULTZ:If you feel, respectfully, that you can get a higher return than the 38 percent you got last year, it’s a free country. You can sell your shares of Starbucks and buy shares in another company. Thank you very much.




"Not every decision is an economic decision." Not exactly what you'd expect to hear from a CEO.



"I supported Bush in 2000 and 2004 and intellegence [sic] had very little to do with that decision." - Hero

"I was wrong" - Hero, 2012

Mitt Romney, introducing his running mate: "Join me in welcoming the next President of the United States, Paul Ryan!"

Rappy's response? "You're lying, gullible ( believing in some BS you heard on msnbc ) or hard of hearing."

NOTIFY: Y   |  REPLY  |  REPLY WITH QUOTE  |  TOP  |  HOME  

Friday, March 22, 2013 4:20 AM

JONGSSTRAW


Quote:

Originally posted by NewOldBrownCoat:
Quote:

Originally posted by Jongsstraw:
The shareholders ARE the company. The Board of Directors, Management, and Staff only serve at the pleasure of the shareholders. If they don't deliver maximum or at least projected profits they're out on their ass.




In a publicly owned company, they are. However, I have worked for privately owned companies, some of them fairly large. Since the owners financed them with their own money, or made private financial arrangements, there were no shareholders. Since " the shareholders are the company", and the companies had none, did these companies not exist?



The thread title says shareholders, which means the topic is about public companies.

NOTIFY: N   |  REPLY  |  REPLY WITH QUOTE  |  TOP  |  HOME  

Friday, March 22, 2013 6:36 AM

NIKI2

Gettin' old, but still a hippie at heart...


GO Howard!!


NOTIFY: Y   |  REPLY  |  REPLY WITH QUOTE  |  TOP  |  HOME  

YOUR OPTIONS

NEW POSTS TODAY

USERPOST DATE

OTHER TOPICS

DISCUSSIONS
Elections; 2024
Fri, March 29, 2024 06:56 - 2076 posts
Russia Invades Ukraine. Again
Fri, March 29, 2024 06:20 - 6156 posts
Russia says 60 dead, 145 injured in concert hall raid; Islamic State group claims responsibility
Fri, March 29, 2024 06:18 - 57 posts
In the garden, and RAIN!!! (2)
Fri, March 29, 2024 02:54 - 3414 posts
BUILD BACK BETTER!
Fri, March 29, 2024 02:49 - 11 posts
Long List of Celebrities that are Still Here
Fri, March 29, 2024 00:00 - 1 posts
China
Thu, March 28, 2024 22:10 - 447 posts
Biden
Thu, March 28, 2024 22:03 - 853 posts
Well... He was no longer useful to the DNC or the Ukraine Money Laundering Scheme... So justice was served
Thu, March 28, 2024 12:44 - 1 posts
Salon: NBC's Ronna blunder: A failed attempt to appeal to MAGA voters — except they hate her too
Thu, March 28, 2024 07:04 - 1 posts
Russian losses in Ukraine
Wed, March 27, 2024 23:21 - 987 posts
human actions, global climate change, global human solutions
Wed, March 27, 2024 15:03 - 824 posts

FFF.NET SOCIAL