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Shareholder Value Maximisation, Stock Market and New Technology: Should the US Corporate Model be the Universal Standard?

Author

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  • Ajit Singh
  • Jack Glen
  • Ann Zammit
  • Rafael De-Hoyos
  • Alaka Singh
  • Bruce Weisse

Abstract

In 1992 a blue-ribbon group of US economists led by Michael Porter concluded that the US stock market-based corporate model was misallocating resources and jeopardising US competitiveness. The faster growth of US economy since then and the supposed US lead in the spread of information technology has brought new legitimacy to the stock market and the corporate model, which is being hailed as the universal standard. Two main conclusions of the analysis presented here are: (a) there is no warrant for revising the blue-ribbon group's conclusion; and (b) even US corporations let alone developing country ones would be better off not having stock market valuation as a corporate goal.

Suggested Citation

  • Ajit Singh & Jack Glen & Ann Zammit & Rafael De-Hoyos & Alaka Singh & Bruce Weisse, 2005. "Shareholder Value Maximisation, Stock Market and New Technology: Should the US Corporate Model be the Universal Standard?," International Review of Applied Economics, Taylor & Francis Journals, vol. 19(4), pages 419-437.
    • Handle: RePEc:taf:irapec:v:19:y:2005:i:4:p:419-437
    DOI: 10.1080/02692170500208533
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    9. Jack Glen & Ajit Singh, 2005. "Corporate Governance, Competition, and Finance: Re-thinking Lessons from the Asian Crisis," Eastern Economic Journal, Eastern Economic Association, vol. 31(2), pages 219-243, Spring.
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    Citations

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    Cited by:

    1. Simon Deakin & Ajit Singh, 2009. "The Stock Market, the Market for Corporate Control and the Theory of the Firm: Legal and Economic Perspectives and Implications for Public Policy," Chapters, in: Per-Olof Bjuggren & Dennis C. Mueller (ed.), The Modern Firm, Corporate Governance and Investment, chapter 9, Edward Elgar Publishing.
    2. Mazumdar, Surajit, 2008. "Crony Capitalism: Caricature or Category?," MPRA Paper 19626, University Library of Munich, Germany.
    3. Zou, Peng & Li, Guofeng, 2016. "How emerging market investors' value competitors' customer equity: Brand crisis spillover in China," Journal of Business Research, Elsevier, vol. 69(9), pages 3765-3771.
    4. Sheng, Andrew & Singh, Ajit, 2013. "Islamic Stock Markets in a Global Context," MPRA Paper 53035, University Library of Munich, Germany.
    5. Ajit Singh & Ann Zammit, 2006. "Corporate Governance, Crony Capitalism and Economic Crises: should the US business model replace the Asian way of “doing business”?," Corporate Governance: An International Review, Wiley Blackwell, vol. 14(4), pages 220-233, July.
    6. Dennis C. Mueller, 2006. "The Anglo‐Saxon Approach to Corporate Governance and its Applicability to Emerging Markets," Corporate Governance: An International Review, Wiley Blackwell, vol. 14(4), pages 207-219, July.

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    More about this item

    Keywords

    Shareholder wealth; Information Technology; stock-market efficiency;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G3 - Financial Economics - - Corporate Finance and Governance

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