Why value value? - Defending against crises

Companies, investors, and governments must relearn the guiding principles of value creation if they are to defend against future economic crises.

In response to the economic crisis that began in 2007, several serious thinkers have argued that our ideas about market economies must change fundamentally if we are to avoid similar crises in the future. Questioning previously accepted financial theory, they promote a new model, with more explicit regulation governing what companies and investors do, as well as new economic theories.

Neither regulation nor new theories will prevent future bubbles or crises. This is because past ones have occurred largely when companies, investors, and governments have forgotten how investments create value, how to measure value properly, or both. The result has been a misunderstanding about which investments are creating real value - a misunderstanding that persists until value-destroying investments have triggered a crisis ... READ MORE

Released by McKinsey & Company - April 2010