The Shareholder Value Myth

CHAPTER 4How Shareholder Primacy Gets the Empirical Evidence Wrong

Chapters 2 and 3 explored how shareholder primacy thinking is neither required by law nor consistent with the real economic structure of public corporations. Nevertheless, the law permits companies to embrace the goal of shareholder value if they elect to do so. A corporation could, for example, mandate shareholder primacy in its charter (although as we have just seen, virtually no public corporation does so).

But as shareholder primacy advocates often point out, there are less-extreme strategies that companies also could adopt to make directors and executives more eager to embrace ...