Managers overemphasis short-term profits
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Please help with the following problem. Provide at least 200 words in the solution.
If managers focus on the current stock value, might this lead to an overemphasis on short-term profits at the expense of long-term profits?
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Solution Summary
The following posting helps with a finance problem. This solution discusses what would happen if managers focus on the current stock value. It explains how it could potentially lead to an overemphasis on short-term profits at the expense of long-term profits. A thorough discussion and rationalization is provided. The explanation is given in 259 words.
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Problem: If managers focus on the current stock value, might this lead to an overemphasis on short-term profits at the expense of long-term profits?
Solution:
This is true to a certain degree. When management focuses on the current stock price, they focus on doing what they can to immediately bring the stock price up. This takes focus off of long term profitability. When it really comes down to it, the decisions based on ...
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