In today’s briefing:
- A Few Students Were Motivated by Assignments from Their Teachers, and They Performed Differently
A Few Students Were Motivated by Assignments from Their Teachers, and They Performed Differently
- Forcing companies to submit ROE targets as measure to counter the fact that half of companies languish below 1x P/B is like a teacher asking students to submit an assignment.
- If that motivates the management, good for them. However, in our experience, only a small percentage of students are motivated by the teacher’s words and see their performance improve.
- If companies are asked to submit ROE targets, they shouldn’t simply meet them by changing capital structure through shareholder returns, but should achieve them through investments for future earnings growth.
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