Thread: Publicly Traded vs Private companies

Here's an interesting piece from Bob Pozen where he talks about the problems caused by short-term thinking: If we want corporate America to avoid short-termism, we need to help free portfolio managers and company executives from the tyranny of quarterly results. Since I work in the investment management industry as the Chairman of MFS Investment Management, I am particularly aware of the pressures to take a short-term perspective in the...

There is also the deliberate insertion of uncertainty into the market by the government. It becomes difficult to plan far into the future, even if you're motivated and skilled at it, when antitrust law has no clear declaration of what actually is illegal and you never know when your industry will be target by politicians crusading against imaginary injustices to pander for a vote.

QUOTE (Castle @ Oct 9 2009, 11:30 AM) There is also the factor that a great deal of schooling is not at all focused on teaching business leaders to plan or even think that long term. To do so you have to have confidence in yourself, the world you're operating in, and cause and effect. Thats not exactly paramount in the current paradigm. This seems to be accelerating as time goes on, too. I can second that. I recently...

There are many successful public companies and of course, many disastrous ones. Those who are successful often have Management who are looking after the long term interests of the company's business. Nowadays, companies have in place a stock options benefit system to encourage Management to perform well and steadily whilst ensuring the company's long term goals are met. Performance plans, which tie management compensation to...

QUOTE (gags @ Oct 31 2009, 01:17 AM) Here's an interesting piece from Bob Pozen where he talks about the problems caused by short-term thinking: If we want corporate America to avoid short-termism, we need to help free portfolio managers and company executives from the tyranny of quarterly results. Since I work in the investment management industry as the Chairman of MFS Investment Management, I am particularly aware of...

One thing I have noticed over the last few years is that many businesses these days suffer from an extreme focus on shorter term profits over long-term profits. I would imagine part of that is the uncertainty that's everywhere nowadays about changing regulatory environments, but to some extent I think it is also related to the decline of long-term thinking in today's business culture. When you look back fifty or a hundred years, it...

QUOTE (Maarten @ Sep 13 2009, 02:14 AM) Unless I am missing something it seems as if a private company would far outperform a publicly traded company in the longer-term because they don't have to sacrifice long-term gains for short term gains. If we assume that they have the same amount of capital, then probably yes. But it should be noted that going public makes it much easier to raise capital.