Governing for Genuine Profit

Michael J. O'Hara ()

No 535, William Davidson Institute Working Papers Series from William Davidson Institute at the University of Michigan

Abstract: Business corporations seek profit. That is, after subtracting cost, they maximize net revenue. Spillovers (both costs and benefits) involve trade-offs governing boards should make. Spillovers, especially when coupled with clumsy applications of discounted present value, distort a business' perception of profit. Today, businesses are buffeted by the old risks of recession and the new risks of terrorism. If modern society is to survive, then the seeds of terrorism and their fruit of tremendous loss must be contained. Accordingly, governing boards must propel businesses towards a paradigm of genuine profit. Governing boards must insist that their businesses prospect for positive feedback loops and implement a sustainable profit stream. In short, governing boards must insist that business be entrepreneurial.

Keywords: Uncertainty; Corporate Governance; Corporate Law; Managerial Discretion; Social Responsibility (search for similar items in EconPapers)
JEL-codes: D81 G34 K22 L21 M14 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2003-01-01
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