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Eric Ries has noble intentions but it seems like he overestimates the power of a trading platform to dictate (for good or bad) the companies' ethos. >A company

by jasode 10y ago

Eric Ries has noble intentions but it seems like he overestimates the power of a trading platform to dictate (for good or bad) the companies' ethos. >A company that wants to list its stock on Ries’s exchange will have to choose from a menu of LTSE-approved compensation plans designed to make sure executive pay is not tied to short-term stock performance. If a company wants to buck the trend of short-term thinking, it doesn't need a new Ries exchange to do it. Jeff Bezos's Amazon is listed on NASDAQ and he continually reported 0 profits quarter after quarter. He avoided earnings manipulation for short term gains and yet, the stock price went up anyway. Likewise, if a company wants to provide a minimum wage of $70k to all employees including the janitor, they can do so while listing on NASDAQ or NYSE. The company doesn't require a hypothetical MLWSE (Minimum Living Wage Stock Exchange.) I can't think of any example in a hundred years of corporate history where a new company can attract a significant (and profitable!) customer base based just on "aspirations". No, you must offer concrete benefits with obvious connections to the bottom line. As an analogy, it's like proposing a new shipping company (Patriotic Shippers Inc) as an alternative FedEx/UPS. As a rule, they won't allow you to be a customer unless you pledge that anything you ship is made in the USA instead of cheap labor in China. Why would companies care about that aspiration? Either you can ship packages for half the price of FedEx, or you can ship them faster for the same price. The aspiration is just the cherry on top and not the primary motivator. Or you propose to create a new airline hub in Iowa. You only allow airlines that provide adequate leg room and do not charge fees for checked baggage. Why would airlines move their fleet from Chicago O'Hare to Iowa based on those rules? No, the hub in the cornfield needs better enticements than that. Maybe if your Iowa hub has new patented deep learning neural nets that predict weather patterns better than the meteorologists in Chicago, and/or your scheduling algorithm for runways can handle 3x the traffic... then maybe the airlines will look at the new location. Also, if your new Iowa airport can play the politics game and convince Iowa state legislature to provide basic income to every resident and thereby cause a massive population exodus from Chicago to Des Moines, that would be another carrot to get airlines' attention. Ries LTSE platform must offer profitable benefits such as technology advantages, or rebates to brokers, etc.

notahacker 10y ago
To put it even more straightforwardly, there's no economically sound reason to believe a firm which chooses to write its corporate governance rules in a certain way wouldn't perform at least as well on the NASDAQ as on a special exchange designed for the purpose.[1] If enough funds believe that shorter term traders are undervaluing a particular NASDAQ stock because they've become so caught up in profit warnings they've missed the long term potential of its R&D, they pile in and pump the price back up again. If there aren't enough investors that believe a particular firm's long term strategy more than justifies conservative short term forecasts and a profit warning due to unanticipated increases in the research budget on NASDAQ, they won't be found on a LTSE either. It's not like the public markets are niche arenas that contrarian investors don't get involved with [1]There's one possible non-economic reason. If existing exchanges' [but not SEC] rules prevent firms from issuing extra information pertaining to their long term research and development or restrict executive bonuses, then there is a point to doing this; afaik they don't.

by jasode 10y ago

notahacker 10y ago

To put it even more straightforwardly, there's no economically sound reason to believe a firm which chooses to write its corporate governance rules in a certain way wouldn't perform at least as well on the NASDAQ as on a special exchange designed for the purpose.[1] If enough funds believe that shorter term traders are undervaluing a particular NASDAQ stock because they've become so caught up in profit warnings they've missed the long term potential of its R&D, they pile in and pump the price back up again. If there aren't enough investors that believe a particular firm's long term strategy more than justifies conservative short term forecasts and a profit warning due to unanticipated increases in the research budget on NASDAQ, they won't be found on a LTSE either. It's not like the public markets are niche arenas that contrarian investors don't get involved with [1]There's one possible non-economic reason. If existing exchanges' [but not SEC] rules prevent firms from issuing extra information pertaining to their long term research and development or restrict executive bonuses, then there is a point to doing this; afaik they don't.