It’s not going to work well is it?
The world didn’t run by shareholder value in the past because people didn’t talk about it.
Hmm. You know, there was no buggery in the past because the word gay meant something different?
He’s also missed entirely how it was originally used. Which is to contrast against management running the company for management’s benefit.
Then we get to the idea that shareholder value means gearing up. Nope, it doesn’t. And then we get the allegation that it’s about cutting costs. Err, no. Cutting production costs is something that any economic system is going to try to do. You know, it’s the flip side of rising productivity? The heart of what makes the economy grow?
Seriously bad piece in fact. Entirely missed that original meaning. It’s not as if it’s difficult to find it out either. I mean, how can anyone discuss this subject without talking about Milton Friedman? This newspaper piece from 1970? Or it’s in Capitalism and Freedom from 1962.
Why, we might even link it into that other bugbear of the left these days, Nancy McLean’s gross misunderstanding of Jim Buchanan’s public choice theory. Everyone is motivated, at least to some extent, by their own economic self-interest. This is true of politicians and bureaucrats. This is also true of company management. The point about shareholder value being that we want the corporate executives to be operating in the interests of their employers, the shareholders, not the management itself.
That’s what the idea is about, that CEOs concentrate upon the size of the dividend, not in amassing 22 country club memberships for themselves (a real example of mid-80s CEO behaviour) coughed up for by said shareholders.
Finally, and I know this is unkind, possibly even illegal these days. But what is a radio station doing employing a presenter with a speech impediment?