Los Angeles Times (September 2)
“A relentless focus on share price can hurt not only employees, taxpayers and society, but shareholders too. Managers who are pressured to raise stock price quickly often resort to tricks — selling assets, cutting payroll and investment, draining cash through dividends and share repurchase programs — to bump up stock price for a year or two. But such strategies often hurt a company’s long-term ability to grow and prosper.”
Washington Post (July 11)
“The eclipse of the long-term shareholder has been accompanied by the eclipse of the individual shareholder.” Over 90% of shares in U.S. companies were held by individuals in the 1950s when the average share was held 7 years. Today, it’s about 30-35% and just 6 months. Institutional investors now make up the difference, but this raises some problems. “Investment funds that hold shares in many different companies often lack the resources to focus on a single corporation’s performance.” As such, they may not be properly fulfilling their role in ensuring effective corporate governance.
Financial Times (February 28, 2012)
European companies have been required to report on a quarterly basis for fiver years. This has “done little but confuse and distract management and investors.” Short-termism encourages management to reject good investments simply because they conflict with quarterly earnings expectations. “Data overload cannot enhance company and shareholder interests. Rather than bombing investors with short-term data, companies should explain their long-term objectives, and how they propose to reach them.”
Tags: Europe, Investors, Long term, Management, Quarterlies, Shareholders, Short term
