The Corporate Objective Revisited

Thunderbird School of Management Working Paper

40 Pages Posted: 10 Dec 2001

See all articles by Anant K. Sundaram

Anant K. Sundaram

Tuck School of Business at Dartmouth

Andrew C. Inkpen

Thunderbird School of Management

Multiple version iconThere are 2 versions of this paper

Date Written: October 2001


In this we paper we explain why maximizing shareholder value should be the sole objective function for governing the corporation and why that objective function is, on balance, good for all stakeholders. Shareholder value maximization is the ideal corporate goal because it is the best among all available alternatives for governing the corporation and, therefore, one that makes the most sense for managers formulating and implementing strategy. We construct a set of five normative arguments for the shareholder value maximization view. To support our position we trace the origins of the corporate governance debate from the late nineteenth century and its resulting implications for accepted corporate law and practice of corporate governance in the United States. We examine the debate as reflected in the shareholder/stakeholder arguments in the management and strategy literatures, and the contractarian/communitarian arguments as reflected in the legal literature.

Keywords: Corporate objective, corporate governance, shareholder value maximization, strategy formulation, stakeholders

JEL Classification: L2, G3, M1

Suggested Citation

Sundaram, Anant K. and Inkpen, Andrew, The Corporate Objective Revisited (October 2001). Thunderbird School of Management Working Paper, Available at SSRN: or

Anant K. Sundaram (Contact Author)

Tuck School of Business at Dartmouth ( email )

100 Tuck Hall
Hanover, NH 03755
United States
603-646-8248 (Phone)
603-646-1308 (Fax)

Andrew Inkpen

Thunderbird School of Management ( email )

15249 N 59th Ave.
Glendale, AZ 85306
United States

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