ABSTRACT
When companies are answerable to shareholders, time horizons shrink – decisions are made around quarterly profits and dividends rather than being guided by a long-term vision. This can have very destructive effects. It marks an alteration in purpose. The company changes from being an enterprise that creates worthwhile products and good work, and becomes a means to another end. In its efforts to maximize shareholder value, the board might well look favourably upon a takeover bid from another organization, which could be in another region or another country. To sweeten the deal, extravagant promises will often be made – to keep the head office where it is, to invest heavily, to increase jobs. The share price surges and shareholders, swayed by thoughts of large returns, willingly oblige by voting for the acquisition. 1
