[ajzinsbwbs]

If this is true, why does the share price go up? Who is buying the stock after the short-term play? Is the market just dumb, and the only people who know the truth are the disgruntled-ex management who complain to the media about short-termism?

My perspective is that activist actions do incur some risk but have positive expected value in the long run. There are horror stories, but overall they create value, which is why people continue to invest in them.

I agree it’s possible to get stuck in local optima, but it’s awfully convenient for many CEOs to be in that situation. I suppose everyone who isn’t already running a trillion dollar company is in a local optima, if you think about it. It’s hard to blame shareholders for getting fed up after enough years of that and saying enough is enough, maybe you aren’t ever going to climb the mountain and should go to that local optima instead.