Shareholder value maximisation is a dumb idea

Rather than maximising shareholder value, the dominant corporate strategy since the 1980s has led to short-term thinking and a blow-out in CEO pay.

Finance is full of stupid ideas. Have any of you spent any time analysing the CAPM or Efficient Market Hypothesis? Dumb ideas the both of them.

But according to James Montier of GMO, a fund management group, neither of those ideas are the bottom of the barrel. The world’s dumbest idea is shareholder value maximisation.


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