Corporate-finance

Yes, I have also read Diesel's Engine by Lyle Cummins, the youngest son of Clessie Cummins, the co-founder of Cummins Engine. If, in reading DE, I am a proven crazy person, then I am, so discount what I say next. If one is fascinated by diesel engines, then this is a "must read." I have not completed the book yet, but having read 300 or so pages and I must say there is much beyond the engines. If you are a Harvard Business Review type, this will have much for you about entrepreneurism, the family business, enterprise capitalization, growth, corporate strategy, the inventor and his role in a technology driven business, timliness, single business small town employers, transportation trends, product quality, employee relations and more. I like reading about successes, but feel like this book portrays an almost charmed life of something impossible to duplicate. If every corporation were as successful as Cummins is portrayed, then we would reach corporate nirvana. Can what has been written here be true? Buy the book, write your own review, and we'll see what you think.

This book is an exercise in fuzzy thinking. Kennedy is totally confused about what shareholder value is. He is confusing shareholders' legitimate desire to get a meaningful return on their capital (enough to compensate for the risk they assumed) with management's unscrupulous attempts to increase reported EPS over the short term. Whatever contributes to the former creates shareholder value. Whatever contributes to the later, doesn't necessary do so. The puruit of shareholder value has nothing to do with unscrupulous management. But that's not all.
He doesn't understand the mechanics of a modern capitalist economy nor does he understand the interactions among different groups in society and the fundamental principals of business valuation and corporate finance.
I should also mention his constant misinterpretation of facts: Kennedy is idealizing the 19th century entrepreneurs as men who started their businesses only for the sake of the common good. Wealth, according to him, was only a byproduct of their charitable attempts to improve society. I doubt if that was true. Being open about one's own greed was not an acceptable social behavior in 19th century. Subsequently, men of wealth tried to come up with noble excuses for their profit seeking.
Kennedy argues that maximizing shareholder value ignores employees, customers, suppliers, communities and the government. If that was true then everything we know about modern Economics must be wrong!
Let's start with employees. Do they really suffer from shareholders' attempts to maximize their own profit? If shareholders didn't care about profit, they wouldn't start the business to begin with and without the business, employees would have nowhere to work. Conclusion: profit seeking (maximizing shareholder value) creates value for workers. The alternative would be a centralized communist economy where government runs all businesses. Business ventures are not evaluated by the profits they could generate but by the amount of people they would employ (more is better).
What about governments? The purpose of government is to serve the people. Government has no other purpose. Therefore we can not say that corporate behavior harms government unless that behavior harms Society. Harm done to a government by a corporation that doesn't harm Society is no harm at all. An example would be any legal attempt to minimize taxes. It harms government because it decreases the amount of funds available to expand bureaucracy but it benefits Society because businesses can allocate capital more efficiently than governments.
What about suppliers? Are they being harmed by the "shareholder value menace"? Suppliers are also businesses with shareholders of their own. Each and every company is both a buyer and a supplier. If a company is being squeezed by its customers, it can always attempt to do the same to its suppliers.
It is true that many communities, many local and national governments, and many workers end up abused by businesses (big and small). It is also true that many businesses are being endlessly abused by militant labor unions and governments. It doesn't follow that business owners should be prevented from seeking lawful ways to increase their wealth.
Kennedy even goes as far as to argue that increasing shareholder value harms shareholders. Here logic fails him completely. The discussion of GE is an illustrative example. Although Kennedy admits that GE's cost cutting initiatives increased value for current shareholders, he claims that the inflated stock price at the end of 1999 will prevent those who buy today (1999) to realize similar gains. True. So what? No one is being forced to buy overpriced common stock. People suffer their own ignorance about corporate valuations. Do we need to hold CEOs responsible for holding their stock prices low so that anyone, who buys a share of common stock at any time, can have a decent return?
Wall Street does not hold CEOs responsible for the stock price of their companies (low or high). It does hold them responsible for the operating results. Stock prices take care of themselves.
His recommendations for change are even sillier then his criticisms. He suggests to replace the pursuit for shareholder value with...building shareholder wealth!!! If I were a Boston snob I could probably see the difference but I am not. It sounds all the same to me. Arguing about the usage of words and terms (among vs. between; many vs. a lot; shareholder value vs. shareholder wealth; etc.) is intellectual no more challenging then collecting stamps or baseball cards. If the Boston snobs think otherwise then I would let them have it their way.

Ebinezer Scrooge managed to put the squeeze to Bob Cratchit and Jacob Marley long before the fundamental theories of shareholder value won the Nobel Prize in Economics. Increasingly, critics such as Allan Kennedy have attacked the concept of shareholder value. They contend that shareholders are enriched at the cost of other stakeholder constituencies. However, a growing body of research suggests that the maximization of stakeholder interests directly translates to superior shareholder value. For example, higher wages tend to provide access to higher quality employees, an increase in retention, expanded job satisfaction, and a more efficient and effective work force. By looking toward a reduced group of suppliers as value-added members of the Corporate team -- and compensating them as such -- many companies find their suppliers assume new roles as senior advisers, cost-cutting consultants, quality control officers, and members of the research and development staff. These are but two examples.

Of course, the maximization of stakeholder returns does not negate the profit equation (profit = revenues - costs) or the appropriateness of shareholder value as the ultimate performance benchmark. What it does do is challenge conventional thoughts and attitudes toward the various stakeholders. In the simplest terms, it generally leads to a smaller and more highly compensated work force and supplier network (to mention only two of the various stakeholder constituencies). Which, in turn, leads to increased shareholder and stakeholder value.

Despite his best attempts, Kennedy and "The End of Shareholder Value" fail to make a convincing argument that shareholder and stakeholder interests are inherently at odds. Companies that have adopted economic profit tools -- such as EVA, MVA, CFROI, and others -- are sophisticated enough to realize this connection. Even Ebinezer Scrooge eventually came around.

In The End Of Shareholder Value: Corporations At The Crossroads, Allan Kennedy persuasively maintains that managing businesses solely to get the stock price higher is bad for workers, customers, suppliers, and ultimately bad business for the stock holders as well. While for the few who hold the stock, and the fewer still who manage the company and then cash out when the stock price is high, the style of managing for stock price benefits, will invariably result in an erosion of company value with employees and shareholder being adversely affected under a short-term management practice and perspective. The End Of Shareholder Value is "must" reading for anyone seeking to build a successful stock portfolio through buying shares in any corporation regardless of size, past performance, or managerial reputation.

This book is a wanna be ripp off of a great book called "COMEBACK". This woman has got to go back to high school Comp101 and learn to check her sources, or take up truck driving.Then she would be driving american wouldn't she?

Others have already noted the various factual errors and sweeping generalizations. The thing that really irked me about this book is that its title leads you to believe that most of the reading will be about the US car industry....in fact, you read chapter after chapter about imports, with references to how Detroit compares to the imports.

One whole chapter on Camry, one whole chapter on Hyundai/BMW, one whole chapter on the ENTIRE history of Toyota & Honda, etc. gets pretty boring, as I really could do without a complete history lesson of the major import manufacturers. The book should have focused on what has been going on at the Big Three (decisions made, models produced, sales info, market trends, quality/reliability) and how consumer preferences have led to the imports' increased market share in the US......

There was just too much emphasis on specific imports with too little relevant content as pertains to the title of the book.

If you work within the Big Three.

The End of Detroit is skillfully written to detail the rise of foreign automakers and the fall of domestic dominance.

The book starts out in the first chapter with a brief automotive industry. This chapter is slow and at one point had me regretting reading this book. Then the second chapter saved the day. In this chapter, the lifecycle of the Ford Taurus is examined to reveal a trend of big three, ignoring the customer desires.
During the next several chapters, historical accounts of companies such as Honda, Toyota and BMW among others detail how each company has managed to gain a stronger foothold in the industry and subsequently squeezed out the Big three.

The final chapters detail the shift of production away from Detroit to Detroit South and the epilogue details the industry in 2010.

This book is a quick read, but may be controversial to those who believe that the Big Three are "The All American Way" Worth reading for yourself to determine what is right!!

I had absolutely no idea what to think of this book when I ordered it, as there was no description or information available on it that I could find. I bought it, as I am a huge devotee of the L-1011. I am by profession an airline pilot with type ratings in seven airliners including the L-1011, and consider the 1011 to be the best of the best, certainly the best of the early widebody aircraft. I was hoping for a pilot's perspective when I read this book, but that was just my personal bias. What I found was a work devoted to the management and financial aspects of the program.

That is not to say that it isn't an authoritative or useful book, it just will not be what the typical airliner fan (or pilot for that matter) will be most interested in. There is interesting information on the early contest vs. the DC-10 that is enlightening, but largely the book details financial arrangements at Lockheed.

The reason most people that know airliners love the L-1011 is it's incredible technological achievement (CAT IIIB, DLC, Flying Stabilizer, etc.), but here these are treated as an expensive waste of money. I am not saying Mr. West is wrong in his thinking, per se (the program DID lose money, after all), it is just that he sees the plane as a piece of metal and plastic, that is strictly a utility defined by a profit and loss statement. He does not seem to appreciate the longlasting strides in plane building and safety the TriStar made.

If you are really an L-1011 completist then by all means read it; it is good to have it available, just be aware it is not about the L-1011 itself, and contains no real technical information on the best airliner ever to grace the sky.

This treatise contains valuable information for managing a corporation. Because it is much easier to form a corporation than it is to run one, many small companies fail to follow important corporate formalities. These books are a good starting point for correcting this problem. Atttorneys representing corporate clients will find the forms to be a real time-saver.