Christensen: CEOs should not maximize shareholder value
10 Jan
Clayton Christensen: “Their time horizon is shorter than even that of even the shortest-term managers. So I don’t think it’s right to think of [these investors] as shareholders of your company. They’re investors who temporarily own securities in your company at a particular point in time. They’re responsible for maximizing the stock value of their investments. You as the CEO are responsible for maximizing the long-term health of your company. “
It’s good to hear some common sense in this department, after many years of the maximizing shareholder value mantra.
Seems there’s a parallel to the current debacle over the sales of Danish TDC: Should we manage for short term profit or long term growth? Here, management is voting for the short term, while one of the main investors (5.5%) is taking the long term view.
I’m sure the maximizing shareholder value mantra is perpuated by some of the largest shareholders themselves…the CEO’s. It seems a bit idealistic for Christensen to think that the CEO’s care about the longevity of their company more than their own brokerage accounts.
Clayton Christensen is one of the reasonable people from HBS, I recommend his laterst book on innovation (which isnt that new anymore, but still worth a read).