In search of an alternative to shareholder value maximization

Gaël Giraud and Cécile Renouard ()
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Cécile Renouard: ESSEC - Business School

Documents de travail du Centre d'Economie de la Sorbonne from Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne

Abstract: This paper argues that mainstream economic theory, far from providing an indisputable plea in favor of shareholder value-maximization, offers striking arguments showing quite the opposite: profit-maximization cannot be a legitimate goal for private firms. This opens the door for a widening of a company's goal. We argue that it should include the concern of all the stakeholders of a company, and cannot be adequately addressed uniquely by Pigouvian taxes or by property rights. Coming to terms with this broad understanding of a company's goal should imply the internalization of the stakeholders' concern within the legal structure of the firm — as in the case of the SCIC in France or the CIC in the UK

Keywords: Corporate social responsibility; shareholder value; stakeholder value; incomplete markets; limited liability; property rights; collateral; cooperative (search for similar items in EconPapers)
JEL-codes: A12 D21 D63 K11 L21 L33 M14 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2011-07
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ftp://mse.univ-paris1.fr/pub/mse/CES2011/11038.pdf (application/pdf)

Related works:
Working Paper: In search of an alternative to shareholder value maximization (2011)
Working Paper: In search of an alternative to shareholder value maximization (2011)
Working Paper: In search of an alternative to shareholder value maximization (2011)
Working Paper: In search of an alternative to shareholder value maximization (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:mse:cesdoc:11038

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