Buffett, Corporate Objectives, and the Nature of Sheep

Cardozo Law Review, Vol. 19, No. 2 (1997) (Symposium on the Essays of Warren Buffett)

Posted: 17 Sep 1998

See all articles by Henry T. C. Hu

Henry T. C. Hu

University of Texas at Austin - School of Law

Date Written: January 1998

Abstract

The "Nature of Sheep" deals with a central issue of corporate finance and corporate law: the core objectives of the publicly held corporation. The article discusses a framework for thinking about this issue that the author has worked on over the years and some of the business principles adopted by Warren E. Buffett and Charles T. Munger of Berkshire Hathaway. The article shows some ways in which "shareholder wealth maximization" can be a surprisingly incomplete specification of even the pecuniary aspects of the corporate objective function. Matters relating to, among other things, disclosure (transparency), risk considerations in corporate investment, hedging, and financing decisions, shareholder clientele effects, and conflicts among "generations" of shareholders are touched on.

Suggested Citation

Hu, Henry T. C., Buffett, Corporate Objectives, and the Nature of Sheep (January 1998). Cardozo Law Review, Vol. 19, No. 2 (1997) (Symposium on the Essays of Warren Buffett). Available at SSRN: https://ssrn.com/abstract=10554

Henry T. C. Hu (Contact Author)

University of Texas at Austin - School of Law ( email )

727 East Dean Keeton Street
Austin, TX 78705
United States
512-232-1373 (Phone)
512-471-6988 (Fax)

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