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The problems of the "shareholder value" ideology

yuhong (1378501) writes | more than 4 years ago

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yuhong (1378501) writes "Ghoshal wrote this paper about the fundamental flaws of shareholder value and agency theory just before he died. One of the fundamental flaws is that it assumes that managers are self-interested economic actors ("Economic Man" or "Homo Economicus") and the market is perfectly efficient (the "Efficient-Market Hypothesis"). The first one is particularly harmful, because through the process of double hermeneutic, it can lead people to behave more like that way. No wonder that "corporate CEOs — and sundry other people at the top of various food chains — are likely to be the least ethical people you're going to meet." (now of course the better big corporations like Google and Costco have more ethical CEOs, many of which do not believe in shareholder value or agency theory). Slashdot's own comments itself has many real-world examples of the harms of shareholder value, agency theory, and the quarterly earnings game. Other sources has critical of it too."
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