Archive for January, 2012

31 of 34 directors surveyed said they would cut down a mature forest or release a dangerous toxin into the environment in the name of profit, because they believed it to be their legal responsibility to maximize shareholder value. (See Jacob M. Rose, “Corporate Directors and Social Responsibility: Ethics vs. Shareholder Value,” Journal of Business Ethics, Vol. 73, No. 3 (Jul., 2007), pp. 319-331.) This belief is, unfortunately a misconception. As noted in a recent Harvard Business Review article, The idea that shareholder value should be the organizing principle of the corporation is of relatively recent vintage — it was only in the 1990s that it really became widely accepted — and as legal scholar Lynn Stout keeps explaining, corporate law has far from fully embraced it. Justin Fox, “How’s that Shareholdery-Valuey Stuff Working Out for You?,” Harvard Business Review. Cornell University law professor Lynn Stout recently wrote a book, The Shareholder Value Myth, arguing that nothing in the law requires […]