The End of Shareholder Value

"The notion of shareholder value as the guiding ethic of business . . . began to get a serious hearing in the 1970s, as a new breed of investment bankers saw in these theories a way to make a lot of money quickly."

"The overvaluation of stocks is simply a symptom of the failure of the shareholder value ethic to produce anything of lasting value. The real problem is in the details of what companies have done to achieve inflated stock price levels."

"Even if the Internet's potential for change is real (and I strongly suspect it is), will the new-economy companies it spawns justify the promise of their early market capitalizations?"

"Employees did not lead the movement to put shareholders' interests above those of all other stakeholders. Nor did they initiate the actions that would rewrite forever the rules governing employee-employer relations. Corporations did."

"Loyalty to the company that employs you is dead, deader than any of the executives who so derided it could ever have imagined. In its place is loyalty to one's profession or job function."

"For centuries, employees have been relatively helpless pawns in the job market. They have had neither the knowledge nor the resources to match up fairly with their corporate bosses. That formula is changing."

"With government influence and interaction with corporations so pervasive, there were bound to be other areas where more tensions would arise as a result of the push for shareholder value."

"Government moves slowly and in fits and starts. But the direction of movement is clear: Corporations are going to have to treat governments as equal partners or pay the price."

"Suppliers responded aggressively to the assault by shareholder-value-driven clients because they had to. Their continued existence was at stake."

"It may be an epitaph to the shareholder value movement to suggest it ended when the customer simply went home and companies with no one left to sell to had to shut down."

"Since the stock market tends to respond positively to any announcement of an impending cut, why worry? Just keep on cutting. Shareholder value has become, for all intents and purposes, managing exclusively for the short term."

"The proper objective for a manager of a large public company is wealth creation, with all that phrase connotes about the staying power of what is achieved."

"Managers in companies may have led the charge into extreme short-termism, but it was the directors responsible for overseeing these managers who gave them the green light."

"Getting a smaller group of more thoughtfully selected members onto the boards of large public companies will not do much to solve the boardroom crisis if the behavior of boards continues in the future the way it has in the past."