Interesting post in the blogging stocks blog awhile back. The article talks about the corporate focus on shareholder value and how it can cause companies to look short term.
My limited opinion is that the sometimes extreme focus on shareholder value and its impact on leadership compensation is a big part of the corporate executive scandals as of late. Also, think about how this goes hand in hand with activist investors who purchase large shares in companies in order to "turn them around"? Perhaps a lot of their tactics really represent ways to inflate shareholder value shorterm in order to get a quick gain but in the end severally degrade the company's profitibility and long term value?
Target is going through this right now with the activist investor William Ackman who purchased around 8% of Target stock right before the market went south. He has since seen his investment devalued over 70%. He is just starting a proxy fight with the board to get representation on it so he can influence Target's strategy.
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