Hypothesis: Few investors (even the ones that see some long term opportunity) want to hold stock for a very long term. This is for a variety of reasons, including liquidity, individual opportunity costs, risks, individual lifetime (if you're old you may be uninterested in a 20 year bet), obsolescence, etc. In the end that horizon dictates of the actions of a shareholder controlled company.
So if the majority of the capital [holders] on the stock market are looking for near/medium term gains, you'll see boards that "maximize shareholder value" populated by those individuals. Their actions will maximize near/medium term value without much regard to long term. That the company could tank doesn't bother them; few investors in the market will be willing to go on a very long term bet against this stock, per the hypothesis, so the stock will do just fine in the near/medium term as a self-fulfilling prophecy; eventually those decisions may catch up and tank the stock, at which point most will jump ship with comfortable profit.
It's well known that having a long term interest yields much better results on the stock market (viz Buffet, other large investors that control companies). Not every investor has this luxury.
So I agree that it may be a good idea to change corporate structure if
1) the hypothesis is good
2) we want to see companies succeed more on long time frames (one might not necessarily want this, maybe with Darwinist ideals, or favoring rapid technological/structural change)
In fact I've seen some companies recently do just that: deliberately neglect shareholder micromanagement in favor of the long term. Companies that retain founders or have CEOs with a strong vision are the ones more able to do this.
What is your definition of destroying long term company value? Every action has an element of risk - companies can be riskier than others and in effect artificially inflate value, but destroy long term value with a bad bet.
Valeant's price is pretty damn low. It's possible their real value is zero (part of the reason the price is so low), but not likely. I'd bet their long-term value is higher than their current market value.
Are you claiming that Allergan's proposed merger is going to destroy their long-term value? Why?
Allergan: After Allergan's previous merger with Actavis they gutted the R&D department to cut costs to justify the merger. They layed 70% of their discovery team, including all but one of their med chemist.
This team and company were not bloated either: They had consistently produced promising drugs over a period of 60+ years. The stock had risen by 500% in five years and posted atleast double digit returns for a decade. Most unfortunate is that Allergan had several promising drugs in the pipeline, but the majority of early phase development got canned. It really was a unicorn that was destined for great things, but got consumed by the latest craze of "don't do R&D just buy companies and raise drug prices by 1000%". Also, recall that the company did not want to merge, but was forced to by the hostile takeover attempt by Valeant. Interesting to see Valeant stock plunge: The new Allergan CEO (Brent Saunders) and the Valeant CEO (Michael Pearson) have similar philosphies and used to work at the same consulting agency. I think Allergan will still do well, but long term they are going to miss out on massive growth potential. IE: Short term cuts to appease shareholders that limit long term growth.
Valeant: Okay the price is currently low, but this correction is after riding a 700% wave fueled by short term decisions. If you are massively in debt and your only growth vectors are creative accounting, buying ever larger companies, and raising your prices, the writing is on the wall.
It's easy to sagely dissect the past and identify the mistaken decisions.
The hard part, though, is identifying a company that today has a share price that is artificially high based on the company having destroyed its long term value. I.e. before the stock tanks.
But if they're a shockingly high number of them, shouldn't they be easy to identify, and short?
Yes it is hard to find them, but looking for companies with a high short ratio [1] is a good place to start. Looking at the top 50 short ratio US companies, MannKind jumps out at me as a stock I would not want to hold [2].
Look outside the class of Apple, Failbook and MS.