Year: 2017
Type: article
Abstract: 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.
DOI: 10.1561/108.00000022
Authors: Oliver Hart, Luigi Zingales
Institutions: Harvard University, University of Chicago
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W3121370091