In Search of an Alternative to Shareholder Value Maximization

31 Pages Posted: 28 Sep 2013

See all articles by Gael Giraud

Gael Giraud

University of Angers - Bureau of Economic Theory and Application (BETA)

Cécile Renouard

ESSEC Business School

Date Written: July 8, 2011

Abstract

This paper argues that mainstream economic theory, far from providing an indisputable plea in favor of shareholder value-maximization, offers striking arguments showing quite the opposite: profit-maximization cannot be a legitimate prioritarian goal for private firms. This opens the door for a widening of a company's goal. We argue that it should include the concern of all the stakeholders of a company, and cannot be adequately addressed uniquely by Pigouvian taxes or by property rights. Coming to terms with this broad understanding of a company's goal should imply the internalization of the stakeholders' concern within the legal structure of the firm -- as in the case of the SCIC in France or the CIC in the UK.

Keywords: Corporate social responsibility, shareholder value, stakeholder value, incomplete markets, limited liability, property rights, collateral, cooperative

JEL Classification: A12, D21, D63, K11, L21, L33, M14

Suggested Citation

Giraud, Gael and Renouard, Cécile, In Search of an Alternative to Shareholder Value Maximization (July 8, 2011). Available at SSRN: https://ssrn.com/abstract=2331987 or http://dx.doi.org/10.2139/ssrn.2331987

Gael Giraud (Contact Author)

University of Angers - Bureau of Economic Theory and Application (BETA) ( email )

61, avenue de la Foret Noire
Strasbourg, 67000
France
+33 3 90 24 21 90 (Phone)

Cécile Renouard

ESSEC Business School ( email )

3 Avenue Bernard Hirsch
CS 50105 CERGY
CERGY, CERGY PONTOISE CEDEX 95021
France

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