WEEKLY COMMENT: Business needs a rebrand

The best of those is the thought that the concept of achieving 'shareholder value' above everything else may, please God, be reconsidered, re-evaluated, and then dumped unceremoniously in the nearest bin. It is this concept that, more than anything, led to the over-blown valuations of dotcom companies and was thus the undoing of us all.

Shareholder value drove investment banks to back dotcom ideas - regardless of their true value - because their own shares would slip if they didn't. Shareholder value made boards offer their executives share option-based pay schemes, thus focusing those excutives' minds on just one thing: seeing the share price soar. And shareholder value - most of all - fails to recognise 'stakeholder value'.

Investment banks failed their stakeholders, which - though they are only now beginning to realise - consists of more than just those people that own their shares. The 'stakeholders' in investment banks include the millions that have lost their jobs in the dotcom crash and the world economy of which they are a major part; the economy that is now staggering about the ring following another mighty blow, struck while it had still been clearing its head from the last.

This time, however, we have an even easier scapegoat: accountants. The regulatory powers must now pore over WorldCom's wrong-doings to work out precisely what they were and what they meant but there is no escaping the fact that, once again, those charged with ensuring investors can trust the statements of businesses have entirely failed. The reason businesses will go to such lengths to improve their quarterly announcements is simple: the emphasis on share price over and above the long-term viability of the company. It is to be hoped that a new brand of business will emerge from what is left.

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