11–20 of 54 posts
Earlier quoted context omitted.
The organizers are talking about tenure voting, "not proposing" means they have not formally filed with the SEC for permission.
i.e. there is no exchange that offers tenure voting, and it's not clear that there ever will be one.
The prevailing narrative on this topic is "greedy investors only care about short-term profits". The spin is that visionary CEOs try to build long-term growth and innovation, but they're continuously stymied by Wall Street vultures. However the empirical evidence tells a very different story. Corporate managers have a demonstrated tendency towards wasteful ego-stroking empire building when not properly monitored. Thi…
That said, I like this Harvard piece a lot because the sidebars do point out that there is a pretty strong correlation between excess short-termism that came along with evolution of the shareholder preeminence theory. There's more than enough room here for everyone to be wrong in their own special, unique ways ;-).
The prevailing narrative on this topic is "greedy investors only care about short-term profits". The spin is that visionary CEOs try to build long-term growth and innovation, but they're continuously stymied by Wall Street vultures. However the empirical evidence tells a very different story. Corporate managers have a demonstrated tendency towards wasteful ego-stroking empire building when not properly monitored. Thi…
Connie Bruck's book on him and his company* provides good context for how and why Milken and his junk bond raiders and the Gordon Gekkos were able to upend corporate America in the 80s. It's because the prior couple decades had fat cat CEOs and middle management that coasted on empires founded by the prior generation. Gekko's speech about Teldar Paper's middle management was not an inaccurate metaphor. There is a trend now that executive tenures are getting shorter, no doubt in part because many are now held to higher standards than many in the 60s and 70s.
There are founders who start companies with bad intentions of using the company as a financial vehicle to funnel money to themselves with as little work as possible, as opposed to founders who start companies to create external value for humanity. The first set of founders and CEOs should be constrained.
All that said, I am still pro-Long Term Stock Exchange because there are issues with the quarterly cadence and high-frequency trading. Don't know if LTSE will be the solution but I support experimentation.
* https://www.amazon.com/Predators-Ball-Burnham-JunkBond-Raide...
https://www.nytimes.com/2018/10/23/business/dealbook/ceo-ten...
Earlier quoted context omitted.
i.e. there is no exchange that offers tenure voting, and it's not clear that there ever will be one.
Right, we're discussing the plans for the long term stock exchange. It hasn't been created yet.
The prevailing narrative on this topic is "greedy investors only care about short-term profits". The spin is that visionary CEOs try to build long-term growth and innovation, but they're continuously stymied by Wall Street vultures. However the empirical evidence tells a very different story. Corporate managers have a demonstrated tendency towards wasteful ego-stroking empire building when not properly monitored. Thi…
This boils down to "having goals is important", which is certainly true, but most of us have seen managers try to improve quarterly numbers at the expense of company health. The effect is pronounced enough that people time purchases to be near other companies end of quarter, knowing they'll get a better deal.
The fact is public market investors are desperate to find high return places to invest capital. There is a shortage not a glut of long term opportunities to invest capital at an adequate rate of return. Companies that can do so are well rewarded by the marketplace. Those that aren’t either aren’t generating adequate returns on invested capital or are unable to communicate their prospects.
The prevailing narrative on this topic is "greedy investors only care about short-term profits". The spin is that visionary CEOs try to build long-term growth and innovation, but they're continuously stymied by Wall Street vultures. However the empirical evidence tells a very different story. Corporate managers have a demonstrated tendency towards wasteful ego-stroking empire building when not properly monitored. Thi…
> Regular quarterly targets are an important part of management discipline. This boils down to "having goals is important", which is certainly true, but most of us have seen managers try to improve quarterly numbers at the expense of company health. The effect is pronounced enough that people time purchases to be near other companies end of quarter, knowing they'll get a better deal.
How are you supposed to plan for the long term, when you can't even see what is going to change in the next 5 years? It makes sense to keep current customers happy and spend most of time planning for next year or two.
The prevailing narrative on this topic is "greedy investors only care about short-term profits". The spin is that visionary CEOs try to build long-term growth and innovation, but they're continuously stymied by Wall Street vultures. However the empirical evidence tells a very different story. Corporate managers have a demonstrated tendency towards wasteful ego-stroking empire building when not properly monitored. Thi…
> Regular quarterly targets are an important part of management discipline. This boils down to "having goals is important", which is certainly true, but most of us have seen managers try to improve quarterly numbers at the expense of company health. The effect is pronounced enough that people time purchases to be near other companies end of quarter, knowing they'll get a better deal.
Yep, this does happen. The point though, is to let shareholders rather than managers decide if this is a good choice. If managers are sacrificing the long-term health of the company, shareholders can vote them out or choose to sell their stake.
This is one of the downsides of the rise of passive investing and ETFs based on market cap - less votes are going into the system and holding people accountable.