Thoughts on the Paradox of Shareholder Value
This month's newsletter is an article written by McBassi CEO Laurie Bassi on shareholder value. The newsletter contains the beginning of the article; click the link at the bottom for the full text.
Day traders - don't waste your time reading this. This is intended for the rest of us who are interested in buying and holding shares of firms that will enable us to invest in our children's education and enjoy our retirement, while hopefully also contributing to the long-run prosperity of our nation and the world.
Now for those of you who are still around, here's the paradox. The way to increase shareholder value is to stop focusing (obsessing?) on it. Rather, the way for firms to increase their shareholders' value is to be a good company - one that is good to its employees, its customers, its communities and the environment.
I know this might sound hopelessly old-fashioned. But consider this. Since my co-authors and I first created the Good Company Index in June 2010, the average stock prices of firms that earned higher scores as good employers, sellers, and stewards have outperformed their less worthy competitors by 30 percentage points.
So if it's as simple as that - the way to increase shareholder value is simply to be a good company - why don't more firms do it?
Click here to read the full article.