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Shareholder value and agency theory at it's worst

yuhong (1378501) writes | more than 4 years ago

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yuhong writes "The worst thing to apply shareholder value and agency theory to is the healthcare and insurance industries. From the abstract of the paper "Shareholder Value and the Performance of a Large Nursing Home Chain" (bolds are mine to show the problems): "Shareholder value was pursued at Sun through three inter-linked strategies: (1) rapid growth through debt-financed mergers; (2) labor cost constraint through low nurse staffing levels; and (3) a model of corporate governance that views sanctions for fraud and poor quality as a cost of business." And that is just from reading the abstract!"
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