Work

The New Corporate Governance

Year: 2022

Type: report

Abstract: In the last few years, there has been a dramatic increase in shareholder engagement on environmental and social issues.In some cases shareholders are pushing companies to take actions that may reduce market value.It is hard to understand this behavior using the dominant corporate governance paradigm based on shareholder value maximization.We explain how jurisprudence has sustained this criterion in spite of its economic weaknesses.To overcome these weaknesses we propose the criterion of shareholder welfare maximization and argue that it can better explain observed behavior.Finally, we outline how shareholder welfare maximization can be implemented in practice.

Source: National Bureau of Economic Research

DOI: 10.3386/w29975

Authors: Oliver Hart, Luigi Zingales

Institutions: National Bureau of Economic Research, Harvard University, University of Chicago

Language: English

Topic: Corporate Finance and Governance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

SDG: Peace, justice, and strong institutions

Open Access status: green

Funder: University of Chicago

OpenAlex ID: W4225749384

Cites: 43

Cited by: 65

Related to: 10