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Evaluate the following statement?

Evaluate the following statement: Managers should not focus on the current stock value because doing so will l?

  • Evaluate the following statement: Managers should not focus on the current stock value because doing so will lead to an overemphasis on short-term profits at the expense of long-term profits.

  • Answer:

    Managers are not motivated towards long-term profits because their employment compensation is attached to short-term results. Many business prospects are being jeopardized because managers do not have the company's interests at heart. They will venture into risky projects for short-term profits and disregard any negative long-term effect to the company.

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A company's profit is not necessarily tied to the value of its stock. It is much more complicated than that. Managers shouldn't pay much attention at all to stock value unless they own stock in the company. Sorry for not giving you a detailed explanation but it just isnt that simple. Hope this helps!

Charlie S

Managers should be focused on long term planning. Getting focused on current stock prices which fluctuate all the time will be a distraction from good business planning.

sort of a jerk

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