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最新個案
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- Quality shareholders versus transient investors: The alarming case of product recalls
- The Health Equity Accelerator at Boston Medical Center
- Monosha Biotech: Growth Challenges of a Social Enterprise Brand
- Assessing the Value of Unifying and De-duplicating Customer Data, Spreadsheet Supplement
- Building an AI First Snack Company: A Hands-on Generative AI Exercise, Data Supplement
- Building an AI First Snack Company: A Hands-on Generative AI Exercise
- Board Director Dilemmas: The Tradeoffs of Board Selection
- Barbie: Reviving a Cultural Icon at Mattel (Abridged)
- Happiness Capital: A Hundred-Year-Old Family Business's Quest to Create Happiness
Quality shareholders versus transient investors: The alarming case of product recalls
內容大綱
In this installment of Organizational Performance, we draw attention to two types of shareholders that tend to push executive decision-making in different directions. Quality shareholders (QSs) invest in a small number of companies and hold their shares over time. QSs offer patient capital that allows executives to focus on building and sustaining competitive advantages. Transient institutional investors (TIIs) hold dispersed shareholdings across a wide array of companies and frequently trade in and out of any given stock. TIIs impose pressure on quarterly earnings reports that induce managerial myopia and inhibit strategic thinking. We consider the influence of these investors on how many consumers are harmed before a defective product is pulled from the market. The good news is that for every 1% increase in QS shareholding, prerecall consumer harm decreases by 2%. Unfortunately, for the same amount of increase in TII shareholding, prerecall consumer harm increases by 6%-a frightening prospect. The case of product recalls draws the difference between QSs and TIIs into stark contrast. In response, we offer practical recommendations to assist managers in navigating these two types of powerful institutional investors.