Posts tagged profits
Chasing Profits at Others’ Expense Can Harm Investors

The mutual fund revolution is overturning a fundamental principle of finance that it’s in the interest of investors for CEOs to maximize profit over time. This principle depends on an increasingly fragile assumption – that most investors in a firm hold shares in relatively few other firms and thus benefit from actions that increase its profits regardless of the cost of those actions to customers and other firms. In a world of portfolio investors, this is no longer true.

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