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SSRN
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Companies Should Maximize Shareholder Welfare Not Market Value

SSRN Electronic Journal
2017
  • 45
    Citations
  • 34,508
    Usage
  • 115
    Captures
  • 124
    Mentions
  • 10
    Social Media
Metric Options:   Counts1 Year3 Year

Metrics Details

  • Citations
    45
    • Citation Indexes
      44
    • Policy Citations
      1
      • Policy Citation
        1
  • Usage
    34,508
    • Abstract Views
      27,071
    • Downloads
      7,437
  • Captures
    115
    • Readers
      114
    • Exports-Saves
      1
      • SSRN
        1
  • Mentions
    124
    • Blog Mentions
      120
      • Blog
        120
    • News Mentions
      4
      • News
        4
  • Social Media
    10
    • Shares, Likes & Comments
      10
      • Facebook
        10
  • Ratings
    • Download Rank
      1,895

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Article Description

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.

Bibliographic Details

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