Companies are rewarded for growth with higher share prices. However, this creates an incentive for managers to “fake” growth by loading up on additional debt or raising additional equity that creates capital that cannot be employed with sufficiently high returns. Professional investors and analysts have learned to be sceptical of asset growth, particularly if it is fuelled by debt. And indeed there is
The right kind of growth
The right kind of growth
The right kind of growth
Companies are rewarded for growth with higher share prices. However, this creates an incentive for managers to “fake” growth by loading up on additional debt or raising additional equity that creates capital that cannot be employed with sufficiently high returns. Professional investors and analysts have learned to be sceptical of asset growth, particularly if it is fuelled by debt. And indeed there is