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Governing for Genuine Profit

Author

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  • Michael J. O'Hara

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.

Suggested Citation

  • Michael J. O'Hara, 2003. "Governing for Genuine Profit," William Davidson Institute Working Papers Series 535, William Davidson Institute at the University of Michigan.
    • Handle: RePEc:wdi:papers:2003-533
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    File URL: http://deepblue.lib.umich.edu/bitstream/2027.42/39918/3/wp533.pdf
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    More about this item

    Keywords

    Uncertainty; Corporate Governance; Corporate Law; Managerial Discretion; Social Responsibility;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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