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September 11, 2006
Creating Shareholder Value
We are fascinated with this month's lead article in Harvard Business Review Ten Ways to Create Shareholder Value (subscription required for full article but you can get the abstract here or contact me for more details.)
In one way, we really wonder how 'shareholder value' became such unchallengeable corporate orthodoxy. We wonder how people working in corpotations can ever be motivated with the goal of making money for someone else. But that's what we expect them to do. We expect them to turn up at work every day and think to themselves "how can I make more money for shareholders today." We expect them to be over the moon with this prospect. Everything else they may put their heart and soul into is expendable in the service to shareholder value. Even their own jobs are expendable to this purpose. Then we treat them with disdain because they are lazy and they don't have any commitment to the corporation.
On the other hand we know how this came to be — see Agency Theory and Shareholder Value.
Given all that at least Harvard Business Review turns the emphasis from short term to long term value. A small step. A step nevertheless.
Posted by chriscurnow at September 11, 2006 9:23 PM
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