VALUE MAXIMIZATION, STAKEHOLDER THEORY, AND THE CORPORATE OBJECTIVE FUNCTION

Michael C. Jensen ()

Journal of Applied Corporate Finance, 2001, vol. 14, issue 3, pages 8-21

Abstract: This paper examines the role of the corporate objective function in corporate productivity and efficiency, social welfare, and the accountability of managers and directors. The author argues that because it is logically impossible to maximize in more than one dimension, purposeful behavior requires a single-valued objective function. Two hundred years of work in economics and finance implies that, in the absence of externalities and monopoly, social welfare is maximized when each firm in an economy maximizes its total market value. 2001 Morgan Stanley.

Date: 2001
View citations in EconPapers

Downloads: (external link)
http://www.blackwell-synergy.com/doi/abs/10.1111/j.1745-6622.2001.tb00434.x link to full text (text/html)
Access to full text is restricted to subscribers.

Related works:
Journal Article: Value Maximisation, Stakeholder Theory, and the Corporate Objective Function (2001)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:bla:jacrfn:v:14:y:2001:i:3:p:8-21

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1078-1196

Access Statistics for this article

Journal of Applied Corporate Finance is edited by Donald H. Chew

More articles in Journal of Applied Corporate Finance from Morgan Stanley
Series data maintained by Christopher F. Baum ().