Agreed, the vast majority of shareholders have little or no visibility into a company. And management and shareholder incentives aren't aligned in timescale: wh

Agreed, the vast majority of shareholders have little or no visibility into a company. And management and shareholder incentives aren't aligned in timescale: while shareholders be in it for the long term, management can be in it for the short term, collecting bonuses on their quarterly performance and leaving when their short-termism comes back to bite the company. Another problem is that shareholders aren't a cohesive group. If the holders of the top 51% of shares vote as a block, they make 100% of the shareholder decisions but reap only 51% of the results. This greatly decreases the cost of doing things like buying a controlling interest in a competitor and running it into the ground, because you can get the holders of 49% of the shares to subsidize your cost. Shareholder behavior in this situation seems irrational if you look only at their behavior within the company, but it's rational in the larger context of their holdings.