For more than 20 years, the business world has embraced the idea that corporations perform better when shareholders have more power and managers focus more on increasing "shareholder value." The results have been disappointing at best: public companies are disappearing, shareholder returns are declining, and recent years have seen a raft of corporate scandals and disasters. In her recent book, The Shareholder Value Myth, Lynn Stout shows how the trope of "maximize shareholder value" has led to an unhealthy focus on share price that is harming our public companies and eroding investors' long-run returns. She debunks the idea that either the law or good economics requires managers to focus exclusively on shareholder wealth and explains how directors can use broader notions of corporate purpose to produce better results for investors and others as well.
This is an archived version of a live broadcast from the 2013 CFA Institute Program Partner Conference.