Meaningfulness, Measurement, Value Seeking and the Corporate Objective Function: An Introduction to New Possibilities
18 Pages Posted: 23 Nov 2010 Last revised: 15 Jan 2011
Date Written: November 22, 2010
Decades of research in education, psychology, sociology, and health care have established that investments in human, social, and natural capital can be measured in metrics as objective as measures of time, commodities, or manufactured products. When universally uniform and accessible forms of such measures are devised and deployed, and when intangible assets are managed alongside tangible ones for maximal value in efficient markets, then, and only then, will social welfare be maximized hand in hand with the maximization of the total market value of every firm in an economy. Instead of the confusion and lack of purpose promulgated by the balanced scorecard, a well designed instrument combining all relevant information in a composite single valued corporate objective function would provide a mathematically transparent, qualitatively authentic, and substantively manageable definition of that function. Enlightened value seeking is contingent on evidence-based, theoretically tractable, and instrumentally mediated information sufficient to the task of bringing externalities into account in financial standards and economic models.
Keywords: Measurement, Externalities, Capital, Intangibles, Value Maximization, Stakeholder Theory, Balanced Scorecard, Multiple Objectives, Social Welfare, Social Responsibility, Corporate Objective Function, Corporate Purpose, Tradeoffs, Corporate Governance
JEL Classification: A13, B23, C81, C82, D61, D62, D63, D64, E22, H23, H54, I31, L21, L22, M14, P11, P12
Suggested Citation: Suggested Citation