Shareholder Value: “The World’s Dumbest Idea”

Shareholder value, and the creation thereof is one of Wall Street's obsessions and a crucial caveat of quality investing. However, James Montier (author of The Little Book of Behavioral Investing among other titles), believes that shareholder value is “the world’s dumbest idea” and in a paper published at the end of 2014, he outlined the evidence for making this accusation. You can read the paper in its entirety at the link above, below is a summary.

Shareholder Value: The world’s dumbest idea

By the late '90s, the corporate world had become obsessed with the notion of shareholder value. As Montier points out in his paper, in 1981 the Business Roundtable, an association of CEOs of leading U.S. companies, stated, “Corporations have a responsibility,...