Why Does Wall Street Punish Companies That Listen To Its Advice

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Floyd Norris writes today about the Los Angeles Times standoff with the Tribune Company, which has demanded layoffs at the paper. Unfortunately, Floyd Norris’s blog is buried behind the Times Select firewall (you know, that weird system in which the Times jams its own signal so that no one can find out what some of its most interesting writers are saying).
Fortunately, Romenesko today provides some choice excerpts. Our favorite is the claim that "Companies that follow [Wall Street's] advice, and still do not produce results, are treated far worse than those that produce results after ignoring Wall Street."
This strikes us as fitting into the category of probably true. We haven’t seen any studies on it—it’s hard to figure out how to even begin to quantify something like “following Wall Street’s advice—but it makes sense. If a company balks at the Street’s advice and continues to have trouble, well there’s probably still some value left in the company just waiting to be unleashed by better management (ie, management that will listen to Wall Street). If a company follows the Street’s advice and still fails, well you might just have a broken company on your hand.

"Trying to keep Wall Street happy did little for Tony Ridder"
[Romenesko]

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