Companies should maximize shareholder welfare not market value

Oliver Hart, Luigi Zingales

What is the appropriate objective function for a firm? We analyze this question for the case where shareholders are prosocial and externalities are not perfectly separable from production decisions. We argue that maximization of shareholder welfare is not the same as maximization of market value. We propose that company and asset managers should pursue policies consistent with the preferences of their investors. Voting by shareholders on corporate policy is one way to achieve this

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Year of publication:	08/2017 ; This version: July 2017
Authors:	Hart, Oliver D. ; Zingales, Luigi
Publisher:	Cambridge, MA : Harvard Law School
Subject:	prosocial behavior \| Betriebswirtschaftliches Ziel \| Corporate objective \| Shareholder Value \| Shareholder value \| Wohlfahrtsanalyse \| Welfare analysis \| Aktionäre \| Shareholders \| Wahl \| Election \| Unternehmenspolitik \| Corporate policy \| Theorie \| Theory

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Extent:	1 Online-Ressource (circa 34 Seiten)
Series:	The Harvard John M. Olin discussion paper series. - Cambridge, Mass., ISSN 1936-5357, ZDB-ID 2551889-6. - Vol. no. 931
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Arbeitspapier ; Working Paper ; Graue Literatur ; Non-commercial literature
Language:	English
Notes:	Forthcoming in Journal of Law, Finance, and Accounting. - This paper is also Discussion Paper 2017-15 of the Harvard Law School Program on Corporate Governance
Other identifiers:	10.2139/ssrn.3004794 [DOI]
Classification:	L21 - Business Objectives of the Firm ; G30 - Corporate Finance and Governance. General ; K22 - Corporation and Securities Law
Source:	ECONIS - Online Catalogue of the ZBW

Persistent link: https://www.econbiz.de/10011772256