Tuesday, July 1, 2014

GM and Shareholder Value

GM screwed the quality pooch for years.  How many millions of cars have been recalled this year?  For years and years, GM management, upon being notified that little things such as ignition switches might fail and kill people, nodded and did nothing.  Why did they do nothing?

Were all those administrative sycophants evil followers of a CEO hell bent on killing customers?  Nah, not at all.  It's much simpler.  They were sycophants alright, but they were following other masters.  I have a feeling that mangers and in GM and other companies which have increasingly produced crap have done so because of Wall Street's analyst's obsession with shareholder value.

If you buy into the bullshit that shareholders own the company and it's thus the duty of managers to make the current share price as high as possible today, then as mangers you will cut every corner you can to cut costs and appear to be worth more that you are and goose up share price.

GM should have gone Chapter 7 in 2008.


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