Download or read book A One Legged Stool How Shareholder Primacy Has Broken Business And What We Can Do About It written by Ed Chambliss and published by Best Friend Brands, LLC. This book was released on 2022-03-14 with total page 270 pages. Available in PDF, EPUB and Kindle. Book excerpt: Have you ever wondered if business needs to be so...unbalanced? Is putting shareholders above everyone else the only way for private enterprise to be successful? Is that "just the way it is?" The short answer is "no." Before "shareholder primacy" took hold in the 1970s, investors weren't more important than other stakeholders. Companies balanced the interests of all the legs of the corporate stool - customers, employees, communities, and shareholders - and everyone's life got better. So, what happened? How did we get to today, where "maximizing shareholder value" is seen as the panacea for all the world's ills? And, more importantly, what's the path forward that allows business to profit by applying its significant resources to solving society's problems, rather than making them worse? We all rely on the stool of business to elevate our lives. Let's fix it before it collapses.
Download or read book Beyond Shareholder Primacy written by Stuart Hart and published by Stanford University Press. This book was released on 2024-04-09 with total page 521 pages. Available in PDF, EPUB and Kindle. Book excerpt: From the author of Capitalism at the Crossroads, a call to consciousness—and action—for individuals, organizations, communities, and nations. Our current Milton Friedman–style "shareholder primacy capitalism," as taught in business schools and embraced around the world, has become dangerous for society, the climate, and the planet. Moreover, Stuart L. Hart argues, it's economically unnecessary. But there are surprising reasons for hope—from the history of capitalism itself. Beyond Shareholder Primacy argues that capitalism has reformed itself twice before and is poised for a third major reformation. Retelling the origin story of capitalism from the fifteenth century to the present, Hart argues that a radically sustainable, just capitalism is possible, and even likely, in our lifetime. Hart describes what it will take to move beyond capitalism's present worship of "shareholder primacy," including reforms to all major economic institutions. A key requirement is eliminating the "externalities" (or collateral damage) of our current shareholder capitalism. Sustainable capitalism will explicitly incorporate the needs of society and the planet, include a financial system that allows leaders to prioritize the planet, reorganize business schools around sustainable management thinking, and enable corporations not just to stop ignoring the damage they cause, but actually begin to create positive impact.
Download or read book The Shareholder Value Myth written by Lynn Stout and published by Berrett-Koehler Publishers. This book was released on 2012-05-07 with total page 151 pages. Available in PDF, EPUB and Kindle. Book excerpt: An in-depth look at the trouble with shareholder value thinking and at better options for models of corporate purpose. Executives, investors, and the business press routinely chant the mantra that corporations are required to “maximize shareholder value.” In this pathbreaking book, renowned corporate expert Lynn Stout debunks the myth that corporate law mandates shareholder primacy. Stout shows how shareholder value thinking endangers not only investors but the rest of us as well, leading managers to focus myopically on short-term earnings; discouraging investment and innovation; harming employees, customers, and communities; and causing companies to indulge in reckless, sociopathic, and irresponsible behaviors. And she looks at new models of corporate purpose that better serve the needs of investors, corporations, and society. “A must-read for managers, directors, and policymakers interested in getting America back in the business of creating real value for the long term.” —Constance E. Bagley, professor, Yale School of Management; president, Academy of Legal Studies in Business; and author of Managers and the Legal Environment and Winning Legally “A compelling call for radically changing the way business is done... The Shareholder Value Myth powerfully demonstrates both the dangers of the shareholder value rule and the falseness of its alleged legal necessity.” —Joel Bakan, professor, The University of British Columbia, and author of the book and film The Corporation “Lynn Stout has a keen mind, a sharp pen, and an unbending sense of fearlessness. Her book is a must-read for anyone interested in understanding the root causes of the current financial calamity.” —Jack Willoughby, senior editor, Barron’s “Lynn Stout offers a new vision of good corporate governance that serves investors, firms, and the American economy.” —Judy Samuelson, executive director, Business and Society Program, The Aspen Institute
Download or read book The Shareholder Value Myth written by Lynn Stout and published by ReadHowYouWant. This book was released on 2012-05 with total page 204 pages. Available in PDF, EPUB and Kindle. Book excerpt: Proves that shareholder primacy has no basis in law or economics and does not deliver better bottom - line results. Suggests better ways to think about shareholders and their relationship to corporations Written by one of America's most distinguished legal scholars, Executives, investors, and the business press routinely chant the mantra that co...
Download or read book Opting Out of Shareholder Primacy written by David G. Yosifon and published by . This book was released on 2019 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt: The central command of corporate governance law is that directors must serve the shareholder interest. Directors may not sacrifice shareholder value in favor of other stakeholders or values. In this Article, I examine whether this rule is mandatory, or merely a default rule which can be altered through private ordering. I argue that Delaware's corporate law, the most important corporate law in the United States, should be understood to have long-permitted deviation from shareholder primacy by charter specification. This conclusion, however, is at least complicated by the recent legislative creation of the Public Benefit Corporation (PBC). The PBC is a new form of business organization that explicitly charges directors with balancing the interests of shareholders and non-shareholders in corporate operations. The PBC innovation may lead judges to conclude that if corporate promoters want to deviate from shareholder primacy, they must do so by using the Public Benefit Corporation. The organizational and governance requirements of the PBC are highly particular, and most of its important features are mandatory. Thus, the Public Benefit Corporation may inadvertently have narrowed flexibility in the creation of corporations that alter the shareholder primacy norm, rather than expanded it, as the PBC's proponents and many commentators have presumed.A more desirable interpretation, however, is that private-ordering of corporate beneficiary is still permitted under the Delaware General Corporation Law, and that the PBC is merely one alternative structure - a non-exclusive “menu option” - which promoters seeking alternatives to shareholder wealth maximization may find convenient to use. I urge judges to adopt this second interpretation, and I urge Delaware lawmakers to clarify their intentions to avoid jurists adopting the view that the PBC is the exclusive path to multi-stakeholder governance.
Download or read book The Divine Right of Capital written by Marjorie Kelly and published by Berrett-Koehler Publishers. This book was released on 2003-01-09 with total page 363 pages. Available in PDF, EPUB and Kindle. Book excerpt: Why “wealth bias” is a holdover from a pre-democratic past—and how to restore a healthier balance of power: “Thought-provoking . . . well-documented and readable.” —Library Journal Wealth inequality, corporate welfare, and industrial pollution are symptoms—the fevers and chills of the economy. The underlying illness, says Business Ethics magazine founder Marjorie Kelly, is shareholder primacy: the corporate drive to make profits for shareholders no matter who pays the cost. In The Divine Right of Capital, Kelly argues that focusing on the interests of stockholders to the exclusion of everyone else’s interests is a form of discrimination based on property or wealth. She shows how this bias is held by our institutional structures, much as they once held biases against African Americans and women. The Divine Right of Capital exposes six aristocratic principles that corporations are built on, principles that we would never accept in our modern democratic society but which we accept unquestioningly in our economy. Wealth bias is a holdover from our pre-democratic past. It has enabled shareholders to become a kind of economic aristocracy. Kelly shows how to design more equitable alternatives—new property rights, new forms of corporate governance, new ways of looking at corporate performance—that build on both free-market and democratic principles. We think of shareholder primacy as the natural law of the free market, much as our forebears thought of monarchy as the most natural form of government. But in The Divine Right of Capital, Kelly brilliantly demonstrates that it is no more “natural” than any other human creation. People designed this system and people can change it. We need a change of mind as profound as that of the American Revolution—and this book provides practical guidance to help employees and communities change corporate governance and unfetter the genius of the free market.
Download or read book Shareholder Primacy and Worker Prosperity written by Lenore Palladino and published by . This book was released on 2018 with total page 31 pages. Available in PDF, EPUB and Kindle. Book excerpt: The increasing financialization of America's large public companies has profoundly affected labor markets. Wages are stagnant, income inequality has grown, and corporate America is no longer a provider of stable employment for middle-class workers. Common explanations include globalization, the rising power of the financial sector itself, the decline of trade union power, and skill-biased technical change. However, changes in how corporations earn profits, and how they use those profits--the two strands of behavior that I call corporate financialization--are key drivers of rising economic insecurity, and require further consideration.
Download or read book The End Of Shareholder Value written by Allan A. Kennedy and published by Basic Books. This book was released on 2008-01-04 with total page 256 pages. Available in PDF, EPUB and Kindle. Book excerpt: In The End of Shareholder Value , Allan Kennedy shines the spotlight on a new revolution in business-as customers, employees, political and social leaders, and governing boards begin to challenge the cozy relationship between executives and investors that has crippled companies in the name of maximizing shareholder value. Analyzing both historical and current material, he explores the colorful history of corporations since the turn of the century, evolving from engines of innovation to machines driven by short-term financial gains. From GE to the hottest new Web-based start-up, those companies that subscribe to the shareholder value ethic cannot be sustained and will, inevitably, be replaced by those who figure out how to create and share wealth with all their important constituencies. Provocative and wide-ranging, The End of Shareholder Value showcases progressive experiments in the public and private sectors, outlines new roles and responsibilities for all participants, and challenges everyone to rethink the purpose of business in the new millennium.
Download or read book Anti Primacy written by Robert B. Thompson and published by . This book was released on 2015 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: Prominent theories of corporate governance frequently adopt primacy as an organizing theme. Shareholder primacy is the oldest and most used of this genre. Director primacy has grown dramatically, presenting in at least two distinct versions. A variety of alternatives have followed -- primacy for CEOs, employees, creditors. All of these theories can't be right. This article asserts that none of them are. The alternative developed here is one of shared power among the three actors named in corporations statutes with judges tasked to keep all players in the game. The debunking part of the article demonstrates how the suggested parties lack legal or economic characteristics necessary for primacy. The prescriptive part of the article suggests that we can better understand the multiple uses of primacy if we recognize that law is not prescribing first principles for governance of firms, but rather providing a structure that works given the economic and business environment in place for modern corporations where there is separation of function and efficiencies of managers as a starting point. Thus the familiar statutory language putting all power in the board must be read against the reality of the discontinuous nature of the board (and shareholder) involvement in governance. Corporate governance documents of the largest American corporations, as discussed in the article, are consistent with this reality, assigning management to officers and using verbs like oversee, review and counsel as the director functions. The last part examines dispute resolution and the role of judges in such a world, with a particular focus on the shareholder/director boundary. At this boundary there are two distinct judicial roles, the traditional role focusing on use of fiduciary duty to check conflict and other director incapacity and the less-recognized role of protecting shareholder self-help. In this more modern context shareholders, because of market and economic developments, are able to effectively participate in governance in a way that wasn't practical three decades ago, when the key Delaware legal doctrines were taking root. What is particularly interesting here is how courts, commentators and institutional investors act in a way that is consistent with a shared approach to power, as opposed to the primacy of any of the theories initially suggested.
Download or read book The Shareholder Value Myth written by Lynn Stout and published by . This book was released on 2012-05-07 with total page 276 pages. Available in PDF, EPUB and Kindle. Book excerpt: Proves that shareholder primacy has no basis in law or economics and does not deliver better bottom - line results. Suggests better ways to think about shareholders and their relationship to corporations Written by one of America's most distinguished legal scholars, Executives, investors, and the business press routinely chant the mantra that corporations are required to ''maximize shareholder value.'' The results have been disastrous. ''Shareholder primacy'' thinking causes corporate managers to focus myopically on short - term earnings reports at the expense of long - term performance; discourages investment and innovation; harms employees, customers, and communities; and causes companies to indulge in reckless, sociopathic, and socially irresponsible behaviors. It's the kind of thinking that led directly to the recent worldwide economic collapse. Jack Welch, once a shareholder primacy true believer, has famously called it ''the dumbest idea in the world.'' Lynn Stout proves that there is in fact no legal obligation for corporations to maximize shareholder value - scholars, lawyers, and corporate officers just assumed there was. Nor, she demonstrates, is maximizing shareholder value the optimal economic model - that's just another unproven assumption, one that is conceptually muddled and, Stout shows, unsupported by the actual evidence on what drives good corporate performance. As if this wasn't enough, Stout also shows how shareholder primacy actually hurts individual investors by obscuring their real, diverse, human interests in the name of serving a hypothetical, homogeneous, abstract, and conscienceless shareholder. Stout looks at new theories that better serve the needs not only of actual human beings who invest but of corporations and society as well. ''Calm, careful, plainspoken, and relentless argumentation that peels away the distracting layers of abstract mumbo jumbo to expose the lunacy of the underlying theory for all to see. Lynn Stout does the world a great favor in exposing shareholder value theory for what it is: flawed and damaging.'' - Roger Martin, Dean, Rotman School of Management, University of Toronto, and author of Fixing the Game.
Download or read book The Shareholder Action Guide written by Andrew Behar and published by Berrett-Koehler Publishers. This book was released on 2016-11-14 with total page 209 pages. Available in PDF, EPUB and Kindle. Book excerpt: “A valuable call to action for small shareholders to change the ways big corporations do business.” —Robert Reich, former US Secretary of Labor Want to make misbehaving corporations mend their ways? You can! If you own their stock, corporations have to listen to you. Shareholder advocate Andrew Behar explains how to exercise your proxy voting rights to weigh in on corporate policies—you only need a single share of stock to do it. If you've got just $2,000 in stock, Behar shows how you can go further and file a resolution to directly address the board of directors. And even if your investments are in a workplace-sponsored 401(k) or a mutual fund, you can work with your fund manager to purge corporations from your portfolio that don't align with your values. Illustrated with inspiring stories of individuals who have gone up against corporate Goliaths and won, this book informs, inspires, and instructs investors how to unleash their power to change the world.
Download or read book Shareholder Primacy as an Untenable Corporate Norm written by Yong-Shik Lee and published by . This book was released on 2023 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: A seminal case in corporate law (Dodge v. Ford Motor Co), set the cardinal principle that corporations must serve the interests of shareholders rather than the interests of employees, customers, or the community. This principle, referred to as "shareholder primacy," has been considered a tenet of the fiduciary duty owed by corporate directors. The shareholder primacy norm has influenced corporate behavior and encouraged short-term profit-seeking behavior with significant social ramifications. Corporations have been criticized for undermining the interests of employees, customers, and the community in the name of profit maximization. Shareholder Primacy as an Untenable Corporate Norm argues that corporate interests and broader social interests, such as benefits to consumers and employees, are not mutually exclusive and can be reconciled by allowing corporate managers and majority shareholders to define corporate interests more broadly, beyond the narrow confines of shareholder primacy. This monograph examines the flaws of shareholder primacy as the principle for corporate governance and discuss an alternative approach (the stakeholder approach). It also discusses the necessity of a statutory adjustment and propose legal reform to clarify the current ambiguity about the legal status of shareholder primacy.
Download or read book The History of Shareholder Primacy from Adam Smith Through the Rise of Financialism written by Judd F. Sneirson and published by . This book was released on 2020 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Standing in the way of sustainable business efforts is the belief that corporate fiduciaries must work to maximize shareholder wealth at all costs. American corporate law in fact imposes no such obligation, yet shareholder wealth maximization remains a powerful social norm. This chapter explores the history of the shareholder primacy norm, tracing the idea from its inception, to its famous articulation in the classic case of Dodge v. Ford, through the influence of the law and economics movement and the rise of financialism at the end of the last century. The chapter then examines the current debate over shareholder primacy, sustainability, and corporate social responsibility, arguing that shareholder primacy has peaked in the United States and is meeting resistance internationally. A new norm of enlightened stakeholderism, I argue, is on the rise, pursuant to which firms aim to be not just profitable but environmentally and socially responsible, as well.
Download or read book Good Company written by Lenore Palladino and published by . This book was released on 2024-12-05 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: "The weak economic case for shareholder primacy-and how policy can win back what's been lost. In the era of shareholder primacy, share price is king. Businesses operate with short-term goals to deliver profits to investors, enjoying stability (and bonuses) in the process. While the public may bemoan the doctrine for its insularity and wealth-consolidating effects, its influence over corporate governance persists. In Good Company, lawyer-economist Lenore Palladino offers a calibrating argument for why shareholder primacy was never all that legal to begin with. Corporations, Palladino shows, draw their power from public charters-agreements that allow corporations to enjoy all manner of operational benefits. In return, corporations are meant to innovate for the betterment of the societies that support them-to do what less-endowed operations cannot. That debt, increasingly wielded for stock buybacks and bonuses in the era of shareholder primacy, is not being repaid. Palladino theorizes a modern corporation that plays the role it was intended and delivers social and economic good in the process. Good Company is both an expert introduction to the political economy of the firm-as it was, as it is, as it can be-and a calibrating examination of how public policy can shape companies, and societies, for the better"--
Download or read book The One Best Way to Manage a Business According to Science written by Marionito Marquez and published by . This book was released on 2020-05-03 with total page 281 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book is part of our more than 100 years of search to find the one best way to manage a business to secure the creation of maximum shareholder value and sustainable profitability. It is written to answer the following questions: 1. What is the one best way to manage a business and allocate its capital to secure the creation of maximum shareholder value and sustainable profitability according to science? 2. How the perspectives of Michio Kaku and Warren Buffet about the source of economic power of US in the last 200 years provide us the scientific evidence about the power of one best way to manage a business to secure the creation of maximum shareholder value and sustainable profitability? 3. Why we are investing several trillion US dollars in Index Fund although Paul Samuelson could not explain why active fund managers cannot consistently beat the benchmark indices such as S&P 500 in the passage of time? What is the science behind the Index Fund? 4. Why many companies that achieved the creation of significant amount of shareholder value and profit for many decades in the past fail, stop growing, and end up being sold for survival? How we can manage the threat of obsolescence, saturation of demand, and socio-political discontinuity? 5. What is Objective Myopia? Why the understanding of many executives on the shareholder wealth maximization norm is somehow myopic? 6. What is strategy according to science? Why focus is necessary to create wealth and diversify to sustain it? 7. Why the outcomes of many studies conducted in the last 100 years to find the one best way to manage a business are pseudoscience despite scientific method was used in the research? What is the Nature of Science or NOS? Why our understanding of the Nature of Science is important in our scientific studies to find the one best way to manage a business to secure the creation of maximum shareholder value and sustainable profitability. For many decades, the Shareholder Wealth Maximization norm has been vilified. Yet, if we will link the study of the World GDP from 1AD to 2006, the development of numerous products and services in the last 300 years, and the development of best management theories and practices in the last 100 years, we will find that as we seek to create wealth in the economy to improve our lives, we keep on developing products, services, and methods to do work or to manage a business that provide us all the necessities, conveniences, and amusements of human life as if we are all guided by invisible hand as Adam Smith explained. And with the use of one best way to scientifically manage a business and allocate its capital, we can expect that the human progress will be accelerated because in the economy, cash is king but it will be a great king if it is in the hands of the people who can change the world. Imagine what the world will be like today if Nikola Tesla was not deprived of the necessary capital!
Download or read book The Goals of the Corporation Under Shareholder Primacy written by Eric Bennett Rasmusen and published by . This book was released on 2014 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Under the doctrine of shareholder primacy, the duty of a corporate director is to act for the benefit of the shareholders. This is not the same as profit maximization. It is only the same if shareholders care about profit and nothing else. The current Hobby Lobby case regarding a corporation's religious exemption from the Obamacare emergency contraception mandate is an example: the shareholders have made it clear they wish the directors to spend more on litigation than could possibly be saved by avoidance of the mandate. Goals other other than pure profit should be permitted both for public and for closely held corporations. Even for public corporations in financial “efficient markets”, maximization of market value may demand that the corporation sacrifice longterm profit for other goals. In some cases this will be to the detriment of minority shareholders who value profit alone, but the problem is no difference in essence from shareholder disagreement because of their differing time horizons or tax positions. While corporate directors should and do have a fiduciary duty to act only for the benefit of shareholders, not for customers, employees, or community, this is not precisely equivalent to profit maximization, nor does it require (or even allow) directors to ignore religious beliefs. In practice the business judgment rule gives directors enough slack to accommodate other goals besides profit maximization, but it is worth detailing the interplay between the beliefs and desires of shareholders and directors to aid conscientious directors in their duty.
Download or read book The Shareholder Primacy Norm and Sleight of Hand written by Swati Lohia and published by . This book was released on 2007 with total page 60 pages. Available in PDF, EPUB and Kindle. Book excerpt:
