• Create BookmarkCreate Bookmark
  • Create Note or TagCreate Note or Tag
  • PrintPrint

What Is a Good Company?

It is difficult to get consensus on what makes for a good company since there are so many dimensions by which you can measure excellence. Many people measure excellence in terms of financial results; good companies earn high returns on their investments and reinvest their funds wisely. Some investors believe that good companies have managers who listen and respond to their stockholders' best interests and that corporate governance is the key. Finally, still others believe that good companies respond not just to stockholders but also to other stakeholders, including their customers, employees and society. Thus, you can have companies that make it on one list and not another. For instance, GE delivered superb financial results under Jack Welch but corporate governance was weak at the company. Conversely, Ben and Jerry's was ranked highly for social responsibility in the 1990s but faced financial disaster during the period.

Financial Performance

The simplest and most direct measure of how good a company is and how well it is run by its management is the firm's financial performance. A well-run company should raise capital as cheaply as it can, husband well the capital that it has to invest, and find worthwhile investments for the capital. In the process, it should enrich investors in the company.


PREVIEW

                                                                          

Not a subscriber?

Start A Free Trial


  
  • Creative Edge
  • Create BookmarkCreate Bookmark
  • Create Note or TagCreate Note or Tag
  • PrintPrint