"Being a publicly traded company — as DST has been since 1995 — does not lend itself well to the kind of community-oriented approach DST took under McDonnell, though. When you are a public company, your duty is to your shareholders, and most of those shareholders 1.) do not live in the community in which your business is based and 2.) wish to see consistent, ever-rising profits. Handing out subsidies to the coffee shop next door, or buying up distressed assets and selling them at cost are, in the eyes of sociopathic capitalists, unnecessary acts of philanthropy. It’s the type of thing that can draw the attention of corporate raiders and activist hedge funds, entities that buy up stock in a company and then use their power to demand the short-term maximization of profits. "
Do the terms asset stripping or corporate raider mean anything anymore?
In the 70's and 80's lots of todays big names made a fortune buying controlling shares of companies that had spent decades reducing their overheads buy buying (instead of leasing) their corp offices, factory machines, etc until the value of the real assets were greater than the stock value. Then all the assets were sold off, and leased back, with shorterm sweetheart deals that lasted just long enough for the raider to sell the resulting company to someone else (or simply in some cases shut it down).
Wall street has long sense stopped serving anyone but themselves. Its long past due for many of their activities to be made illegal.
Tech service companies have to rely on reputation for renewals and referrals. Focusing on quarterly profits makes managers take short-cuts that burn bridges. It might work in a commodity business where the outputs are standardized or easy to grade, but short-cutting reputations is shooting your own foot.
That's not capitalism, it's our culture around capitalism. There is nothing inherent to capitalism that stresses short term growth vs. long term growth. For example much of the push for short term growth comes from the stock market, but the stock market (or public ownership at all) is in no way required for capitalism to work (and IMO it would probably be better without it).
False. Capitalism: an economic and political system in which a country's trade and industry are controlled by private owners for profit, rather than by the state.
It's the government's requirements for filing 10-Ks and 10-Qs that generate this type of behavior. Plenty of examples out there where capital-raising efforts, and therefore investment decisions are stymied by markets that are driven by quarterly government reporting.
Some companies have been able to fight it off and really put long-term profitability into place (Apple seems like a reasonable example of this), but it is the exception, not the rule, and many times does not last long.