The Stakeholder Fallacy: Joe Biden s vision of capitalism is a recipe for failure. | City Journal
For now, shareholder primacy remains baked into American corporate governance. The idea that maximizing shareholders interests should be the primary objective of any public corporation took hold in the 1980s (an era of hostile takeovers), after a decade of low profits and dismal stock performance. Though much criticized, shareholder capitalism offers many benefits not only to shareholders but also to the stakeholders whom Biden is concerned about.
Maximizing shareholder value simplifies a corporation s objectives and makes performance easier to assess. Contrary to public perception, it does not create conflicts between different stakeholders, because economic success is not zero-sum. Shareholder value, when done right, aligns the incentives of corporate managers, a corporation s owners, and the broader community.
Generally, shareholders care about bigger dividends, which are based on current profits; and on a rising stock price, based on the expectation of future profits.
I miss the 1980s.