The Endurance of Shareholder Value Maximization as the Preferred Corporate Objective

Andrew C. Inkpen, Anant K. Sundaram

Research output: Contribution to journalArticlepeer-review

1 Scopus citations

Abstract

Sundaram and Inkpen (2004a, 2004b) proposed shareholder value maximization (SVM) as the preferred corporate objective since it alone impels the firm to implement strategies that enhance outcomes for all stakeholders. Goranova and Ryan (2021) argue that three recent developments – common ownership, decoupling of owners from managers, and greater divergence in shareholder interests – call into question our SVM view. We dispute their arguments: (i) The developments they cite are overplayed in the literature, and may not matter much for SVM; (ii) To the extent they do matter, their concern is less about SVM’s relevance as corporate objective but more whether these developments bias decisions towards the short-term. We do not disagree since, after all, Sundaram and Inkpen (2004a) is solely about SVM for the long-term; (iii) If anything, Goranova and Ryan’s (2021) proposed solution of ‘strategic corporate governance’ can be viewed as an endorsement of the relevance and enduring primacy of SVM for the long-term.

Original languageEnglish (US)
Pages (from-to)555-568
Number of pages14
JournalJournal of Management Studies
Volume59
Issue number2
DOIs
StatePublished - Mar 2022
Externally publishedYes

Keywords

  • corporate governance
  • corporate objective
  • shareholder value maximization
  • stakeholders

ASJC Scopus subject areas

  • Business and International Management
  • Strategy and Management
  • Management of Technology and Innovation

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