Shareholder Value - Criticism

Criticism

See also: Corporate social responsibility

The sole concentration on shareholder value has been widely criticized, particularly after the late-2000s financial crisis. While a focus on shareholder value can benefit the owners of a corporation financially, it does not provide a clear measure of social issues like employment, environmental issues, or ethical business practices. A management decision can maximize shareholder value while lowering the welfare of third parties.

It can also disadvantage other stakeholders such as customers. For example, a company may, in the interests of enhancing shareholder value, cease to provide support for old, or even relatively new, products.

Additionally, short term focus on shareholder value can be detrimental to long term shareholder value; the expense of gimmicks that briefly boost a stocks value can have negative impacts on its long term value.

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Famous quotes containing the word criticism:

    “The critic lives at second hand. He writes about. The poem, the novel, or the play must be given to him; criticism exists by the grace of other men’s genius. By virtue of style, criticism can itself become literature. But usually this occurs only when the writer is acting as critic of his own work or as outrider to his own poetics, when the criticism of Coleridge is work in progress or that of T.S. Eliot propaganda.”
    —George Steiner (b. 1929)

    “...I wasn’t at all prepared for the avalanche of criticism that overwhelmed me. You would have thought I had murdered someone, and perhaps I had, but only to give her successor a chance to live. It was a very sad business indeed to be made to feel that my success depended solely, or at least in large part, on a head of hair.”
    —Mary Pickford (1893–1979)

    “The aim of all commentary on art now should be to make works of art—and, by analogy, our own experience—more, rather than less, real to us. The function of criticism should be to show how it is what it is, even that it is what it is, rather than to show what it means.”
    —Susan Sontag (b. 1933)