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>If a company's "owner" is mainly short-term money, then any publicly traded company is vulnerable to takeovers that destroy long-term value in favor of extract
by iwwr 12y ago
>If a company's "owner" is mainly short-term money, then any publicly traded company is vulnerable to takeovers that destroy long-term value in favor of extracting cash in the short term.
That just means companies have to be valued high enough so they're not vulnerable to the 'raiders'. However, if that's not the case then there may be a fundamental problem with the long term prospects of the company. It may be better indeed to use the capital of it for something else.
- wpietri 12y agoMy issue with answers of this sort is that they seem circular. If the concern is about the cult of shareholder value, answering with the dogma of shareholder value doesn't enlighten. I get that economic theory can be a useful way to look at actual productive relations in the world. But it's just a theoretical model. If we find that following the theory leads us to behaviors that destroy the things economics was created to describe, we should stop to ask ourselves whether we could use a better theory.