Financial leverage increases the expected return on equity. We show that this leverage effect is not only irrelevant for shareholders' present wealth but also for the return on their investments. This result is straightforward if we do not only look at the return on equity but at the return on...

Current financialization marks a broad cultural shift in the economy. It also marks a cultural shift within organizations. Primarily, it seems to challenge the status of profit as an ultimate measure that no logic transcends, sanctifying in its place the concept of ‘shareholder value’. This...