The expectations treadmill can be detrimental to total returns to shareholders (TRS )if the managers grow the company without keeping the ROIC above the cost of capital or if they make unnecessary acquisitions that do not create value.

Question

Quizplus · Accepted Answer

The expectations treadmill can lead to managers growing the company and making acquisitions that do not create value, which can lower the ROIC and ultimately harm total returns to shareholders.

The Expectations Treadmill Can Be Detrimental to Total Returns to Shareholders