Maximising the ‘Default Standard’ of Shareholder Value

Francesco de Zwart
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Francesco de Zwart: University of Adelaide

Chapter Chapter 8 in The Key Code and Advanced Handbook for the Governance and Supervision of Banks in Australia, 2022, pp 95-101 from Springer

Abstract: Abstract Chapter 8 of the Stage 2 Key Code and Advanced Handbook for Australian major banks examines the merits of maximising the ‘default standard’ of shareholder value. It asks “should the shareholder wealth-maximisation principle apply to banks and financial firms?” The discussion identifies that the market for corporate control may be weaker for banks than non-banks. We review the shareholder wealth maximisation principle and the short-term share price touching upon agency theory, shareholder primacy and the shareholder-wealth maximization principle. We ask whether the shareholder wealth-maximization principle exacerbated the severity of the financial crisis? We identify that, in the GFC, conservative risk strategies led to better survival outcomes in the crisis and we highlight the short-term danger of the emphasis on quarterly results.

Keywords: Default standard; Shareholder value; Shareholder-wealth maximisation principle; Market for corporate control; Agency theory; Shareholder primacy; Severity of GFC; Risk strategies; Quarterly results (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-981-16-1710-2_8

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DOI: 10.1007/978-981-16-1710-2_8

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