The Different Actions To Make a Company Lose Value

For this week’s class we read different articles about the ethics and professionalism that are necessary to the success of a firm’s investor relations department. One of the articles talked about the ten things necessary to create value for shareholders. The suggestions for value included not managing earnings, making decision and acquisitions that maximize value, not carrying assets that only maximize value, return cash when there is no value, rewards CEOs, operating-unit executives and middle managers for their efforts, requiring executives and bear risks and lastly, provide investors with relevant information.

While thinking about the different tactics that typically enhance shareholder’s value of a business, I realized that it is also important for IR departments to understand what type of actions would cause shareholders to lose value of a company. I then found a list of ten things not to do which closely corresponds to this weeks discussion on ethics and professionalism. The article is written by Stanley Bing and explains ten different procedures that business should attempt to avoid.

The activities Bing refers to include not bringing on executive board members that have too little knowledge or have too much knowledge and think their opinions are the only ones that would work for the company. Having either type of personality on the executive board would be detrimental as they could either be entirely unhelpful, or too involved in their own ideas. Bing also suggests that in order for stockholders to value the company, it is necessary to avoid unnecessary expenses. While it is important to not spend aimlessly, value will be lost if the cuts involve cutting important necessities to the company.


Value will also be lost if executives are taking too many business trips, where stockholder’s money is being spent for executives to have exciting vacations. When workers are working a lot, and hard, people will consider the company more value. If hours are lacking, people will lose value for the company due to the performance of executives. Bing suggests that relying to the existing workforce will decrease the value of a company. To improve value, it is necessary to hire youngsters less concerned with pensions and are very willing to work. The last two recommendations of things to avoid are to pay senior executives to much, along with not paying the CEO enough. It is stated that overpaying senior executives will create a loss of value, while underpaying the CEO would also create problems for the company.

The article was interesting due to the fact that it mentioned a couple different methods than the Harvard Business Review article we needed to read for class. All of these components are important in order for investors to find value and a purpose in purchasing stock within any company.