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In search of an alternative to shareholder value maximization

Author

Listed:
  • Giraud, Gaël

    (CNRS, Paris School of Economics, ESCP-Europe)

  • Renouard, Cécile

    (ESSEC Business School)

Abstract

This paper argues that mainstream economic the- ory, far from providing an indisputable plea in favor of shareholder value-maximization, o ers striking arguments showing quite the opposite : pro t-maximization cannot be a legitimate prioritarian goal for private rms. 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.

Suggested Citation

  • Giraud, Gaël & Renouard, Cécile, 2011. "In search of an alternative to shareholder value maximization," ESSEC Working Papers WP1108, ESSEC Research Center, ESSEC Business School.
    • Handle: RePEc:ebg:essewp:dr-11008
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    References listed on IDEAS

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    More about this item

    Keywords

    Corporate social responsibility; shareholder value; stakeholder value; incomplete markets; limited liability; property rights; collateral; cooperative;
    All these keywords.

    JEL classification:

    • A12 - General Economics and Teaching - - General Economics - - - Relation of Economics to Other Disciplines
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • K11 - Law and Economics - - Basic Areas of Law - - - Property Law
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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