Stock Market Performance

They assume that the stock market automatically penalizes any corporation that invests its resources poorly. | They assume that they're using their shareholders' resources efficiently if the company's performance, especially ROE and earnings per share-is good and if the shareholders don't rebel. | So companies investing well grow, enriching themselves and shareholders alike, and ensure competitiveness; companies investing poorly shrink, resulting, perhaps, in the replacement of management. | In short, stock market performance and the company's financial performance are inexorably linked. | The top executives of the large, mature, publicly held companies hold the conventional view when they stop to think of the equity owners' welfare.