On one hand, I think that good management is a significant plus for any company. The rocket ship ride MSFT has been on since Satya Nadella became CEO is a prime example. Bad management can do horrible damage, as well. The epic loss in GM’s market share as Japanese competition emerged is probably the poster child for this.
On the other hand, evaluating management is a highly subjective endeavor. It’s also hard–obvious outliers like the US autos or back-then MSFT aside–to do well, in my experience. And it takes time to develop a sense of what’s important and what’s not. For example, there’s an article online in today’s FT (which I can no longer find) about a McKinsey study that correlates high margins, assumed to be a sign of good management, with a diverse workforce and a diverse board of directors. The assumption that high margins are a good thing, though. My experience is that this isn’t the case, and that low margins/high turnover is a better situation.
I’d prefer to look at the structure of the main market a firm is in; how fast that market is growing; what the relative market shares are–and how they’ve changed over the past few years; and the strengths/weaknesses of the major players.
In very mature markets, the optimal strategy for shareholders may be for a company to gradually self-liquidate and manage the firm for maximum dividend payments. Probably the worst strategy, although likely also the one most often pursued, is instead to use cash flow to pivot into a new field–where management has no skill or experience. Think: Time Warner buying AOL.