Yep, definitely happens a lot outside the corporate world.
Taxation doesn't quite fit the pattern we're talking about here, anyway. If a TV channel increases its ads, the obvious failure mode is that viewers go elsewhere instead (and hence advertisers spend less and revenue falls). But inter-country mobility is small enough that even quite large changes in tax rates aren't likely to make a lot of taxpayers go elsewhere. You occasionally hear rich famous people threatening that if some potentially tax-raising party comes into power they'll leave the country, but they don't generally actually do it.
(That may be different for corporate as opposed to individual taxes. Large multinational companies may be willing and able to move their operations around to minimize the taxes they pay.)
I imagine someone there has figured out the inflection point where they can reduce the quality of their service without losing a significant number of customers. But perhaps that's giving them to much credit.
That is one benefit of the modern internet. As a customer that is quality-sensitive about many products, I can 'evangelize' to insensitive customers and attempt to bring them into the fold and start demanding better quality products, thereby increasing the quality I receive from the product myself.
"The simplest way to explain the behavior of any bureaucratic organization is to assume that it is controlled by a cabal of its enemies."
But doesn't that depend on a significant fraction of investors being rational and having pretty good information? And on markets not being "rigged"?
And I wonder whether the price of current stock market transactions adequately reflects the knowledge of all investors, including the long-term ones.
>And I wonder whether the price of current stock market transactions adequately reflects the knowledge of all investors, including the long-term ones.
That's sort of an odd way to put it. By definition the market transactions reflect the knowledge of all investors, unless you're postulating they don't apply knowledge when they trade. Do you mean the stock price is influence by people without knowledge other people do have? That's true.
But professional and institutional investors have the most influence, and they've got a pretty good idea when managers are eating the seed corn. It's an obvious strategy for executives, so professional investors are always on the lookout.
Do some executives get away with padding their bonuses through short term strategies? Sure. But I think it's rare.
When you put it that way, it does sound implausible. But it demonstrably happens, so lets consider how that explanation may be wrong.
You don't necessarily have to fool a lot of sophisticated investors, you have to fool people/firms with sufficient funds available to invest, who can be talked into the belief that they are taking advantage of opportunity the rest of the market is missing, perhaps one which is uniquely available to them because of synergies.
Often this can be one person or firm rather than a lot of investors (sophisticated or not) -- its not as if acquisitions where the acquirer pays above market price and ends up a few years later taking a huge charge when its expectations fail to pan out are unheard of.
And this makes sense. If firms can make foolish decisions in running their business which negatively impact the future of the company, one form this can take is buying some other business at an unjustified price where someone else had already made a foolish decisions that negatively impacted the future value of that business.
If you know of specific companies that have destroyed their future for a short term stock gain, you stand to make a fortune by short selling the stock.