Maximizing Shareholder Value

It's almost impossible for a public company to announce that they are going to reduce revenue or profits for the next quarter without taking a hit in its valuation. Short-term economic indicators seem to override any other long-term indicators, if such indicators even exist. So, many public companies do whatever they need to keep meeting shareholders' short-term expectations.

One of the actions that has short-term, almost immediate effects in reducing costs is laying people off. Four of the big five have announced massive layoffs for 2022: Meta, Microsoft, Amazon and Google. Of course, there is more to these layoffs than appeasing investors. But there is a strong correlation.

As Jason Fried, CEO of Basecamp said recently, "I can’t imagine anything less interesting in business than maximizing shareholder value."