What business except food is recession proof?
Answers: Sounds like its right out of a textbook. So here's what I would read out: The type of compensation received by management have a lot to do near their motivations. If they receive most of their compensation in forms of stock, they tend to pay envelope more attention to the stock price. If they receive bonuses for certain twelve-monthly benchmarks, for example, they shoot for those benchmarks even if it doesn't do much for the stock. Basically, you get what you reward.
'Maxinimiation', that's a appropriate word and summarizes well the issue. To know if and why running would pursue goals that are not consistent next to shareholders interest, you need to know first what are the motives and interests of respectively party.
The administration works as an agent for a principle who are shareholders. As in heaps cases the two do not have indistinguishable goals and interests, they are even contradictory sometimes. This is why it is high-status for shareholders to motivate and align management interests to their own.
Shareholders want to receive dividends and increase within share price (even though even this goals is flawed if it is too focused on the short-term). Management on the otherside requests to get salaried for the longest period, making smaller quantity effort possible.
Companies usually reward management next to their own stocks or with call for options (right to buy stocks at a specific and lower price). So the government has an incentive to drive stock prices up contained by order to profit from their stocks. However, sometimes this does not work and seem to be deadly for the company. CEOs surrounded by this case own an incentive to 'cook' the books or rivet in an unsustainable practice (such as distributing dividends that benefits themselves and shareholders surrounded by the short period of their tenure, but over the long run, the company's power to generate future profits and craft investments is hindered, and usually it is the subsequent management who is blamed when the problems finally become clear)
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