CEOs Maximizing Share Price in the Present

Most CEOs think their goal is to maximize current share price. Some are well-intentioned and think this the right thing to do, while others do it because they benefit financially from it. In either case, it encourages them to maximize this quarter's reported earnings, even to the potential detriment of future earnings. The proper goal should be to maximize the intrinsic value of the business, for example by spending money now on prudent research and development that will make the company more competitive down the road.

Tags: management, ceos

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