5 votes

The shareholder value myth

Posted by Neverland
Tags: business, ethics, shareholders, myth busting, markets.stock, opinion, lynn a stout, source.europeanfinancialreview, long read
http://www.europeanfinancialreview.com/?p=883

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Title
The Shareholder Value Myth | The European Financial Review | Empowering communications globally
Published
Apr 30 2013
Word count
4179 words

3 comments

  1. [2]
    Neverland
    Link

    Shareholder primacy theory is suffering a crisis of confidence. In The Shareholder Value Myth: How Putting Shareholders First Harms Investors, Corporations, and the Public Lynn Stout discusses how the traditional managerial focus on the shareholder’s interest can be harmful for the corporation and even for shareholders themselves and how it is more valuable to spread the focus over several objectives.

    1 vote
    1. nacho
      Link Parent
      I think the key point of the article is that companies are better served by also looking at long-term shareholder value. that often takes the form of "other things" than putting shareholders...

      I think the key point of the article is that companies are better served by also looking at long-term shareholder value.

      that often takes the form of "other things" than putting shareholders first, but looking beyond short-term returns is still putting shareholder value first.

      Although, that's a lot less sexy than framing it as something completely different from shareholder value.

      2 votes
  2. Neverland
    Link
    This idea is often used in the USA as something that trumps all other concerns. I believe it is often considered as the law, when in fact there is no such legal precedent. This piece from 2013...

    This idea is often used in the USA as something that trumps all other concerns. I believe it is often considered as the law, when in fact there is no such legal precedent. This piece from 2013 does a good job of explaining the issue.

    Debunking the Shareholder Value Myth: Law


    Yet it is important to note that shareholder primacy theory was first advanced by economists, not lawyers. This may explain why the idea that corporations should be managed to maximize shareholder value is based on factually mistaken claims about the law.