Maximising Shareholders Value (Score 2, Insightful)

One of the essential problems is that, by law the management are required to maximise shareholder's value. There are lots of things that management can do that will increase shareholder's value (i.e. the value of the stock) in the short-term but may be detrimental over the long-term. Acquiring other companies is a typical action. Alternatively they might try to boost profit in the short-term by slashing staff or research budgets and then angling for a buy-out by a big multinational. All these things are easily defensible. The stock goes up, the shareholder's see their "value" increase and everyone is happy.

On the other hand we have long-term actions such as basic research that are far harder to justify to shareholders used to the instant returns of recent years.

If the stock market has less speculators we'd probably see less of the fast money which in term might lead to shareholder's valuing long term actions more. However there will always be people who attempt to make short-term returns, and while this is the case there will always be the urge to cash-in as soon as possible.