Download This PaperThe New Corporate Governance
University of Chicago Business Law Review, Forthcoming
Chicago Booth Research Paper No. 22-12
George J. Stigler Center for the Study of the Economy & the State Working Paper No. 317
European Corporate Governance Institute - Law Working Paper No. 640/2022
29 Pages Posted: 20 Apr 2022 Last revised: 19 Aug 2022
There are 3 versions of this paper
The New Corporate Governance
The New Corporate Governance
The New Corporate Governance
Date Written: August 17, 2022
Abstract
In the last few years, there has been a dramatic increase in shareholder engagement on environmental and social issues. In some cases shareholders are pushing companies to take actions that may reduce market value. It is hard to understand this behavior using the dominant corporate governance paradigm based on shareholder value maximization. We explain how jurisprudence has sustained this criterion in spite of its economic weaknesses. To overcome these weaknesses we propose the criterion of shareholder welfare maximization and argue that it can better explain observed behavior. Finally, we outline how shareholder welfare maximization can be implemented in practice.
Keywords: Shareholder Value, Shareholder Welfare, Proxy Voting
JEL Classification: G3, L21, K22
Suggested Citation: Suggested Citation
European Corporate Governance Institute (ECGI) ( email )
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Luigi Zingales (Contact Author)
University of Chicago - Booth School of Business ( email )
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Chicago, IL 60637
United States
773-702-3196 (Phone)
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European Corporate Governance Institute (ECGI) ( email )
c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium