The corporate objective : Meta-synthesis of legal, economic and managerial literatures on the shareholder value maximization as a corporate objective
Vuorinen, Vesa (2019-08-07)
Vuorinen, Vesa
07.08.2019
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi-fe2019080723601
https://urn.fi/URN:NBN:fi-fe2019080723601
Tiivistelmä
Social science usually strives to maximize the social welfare and economics as a science
influencing in the society should strive to maximize the social welfare in the economy.
Capitalism and the corporate form of business are among the most influential innovations
ever made by the humankind, simply because they determine how the scarce resources of
our planet Earth are allocated. Many publicly listed corporations are governed through
the shareholder value maximization theory which claims to maximize the social welfare
when the shareholder value is maximized. The question that remains unanswered is how
social welfare becomes maximized when the shareholder value becomes maximized and
why the scholars and practitioners are unable to conclude what should be the corporate
objective?
Articles from six major databases are systematically collected and reviewed to examine
the viability of the shareholder value maximization as a corporate objective. In total of 68
articles were systematically retrieved. Theoretical sampling is employed to elaborate the
depth and quality of the synthesis. The goal is to introduce ideas, historical pathways,
logics, inconsistencies and misunderstandings to provoke further investigation and
discussion. The central objective of the thesis is to either justify the shareholder value
maximization as a corporate objective or to refute its position as such.
Results suggest that all existing arguments for the shareholder value maximization can be
either deduced to the utilitarian logic or dismissed as irrelevant. The only viable
justification for the corporate objective is that it increases social welfare in the utilitarian
sense. The thesis provides a timeline and synthesizing graphical presentation of the
typology of the shareholder value maximization. The typology and the timeline are
unprecedented contributions. The timeline helps to connect different data points to the
shareholder value maximization.
The overarching conclusion is that market failures and externalities are significantly
weakening the possibilities of the shareholder value maximization to successfully
maximize the social welfare. However, shareholder value maximization might still be the
best alternative providing the closest approximate of the maximum social welfare.
influencing in the society should strive to maximize the social welfare in the economy.
Capitalism and the corporate form of business are among the most influential innovations
ever made by the humankind, simply because they determine how the scarce resources of
our planet Earth are allocated. Many publicly listed corporations are governed through
the shareholder value maximization theory which claims to maximize the social welfare
when the shareholder value is maximized. The question that remains unanswered is how
social welfare becomes maximized when the shareholder value becomes maximized and
why the scholars and practitioners are unable to conclude what should be the corporate
objective?
Articles from six major databases are systematically collected and reviewed to examine
the viability of the shareholder value maximization as a corporate objective. In total of 68
articles were systematically retrieved. Theoretical sampling is employed to elaborate the
depth and quality of the synthesis. The goal is to introduce ideas, historical pathways,
logics, inconsistencies and misunderstandings to provoke further investigation and
discussion. The central objective of the thesis is to either justify the shareholder value
maximization as a corporate objective or to refute its position as such.
Results suggest that all existing arguments for the shareholder value maximization can be
either deduced to the utilitarian logic or dismissed as irrelevant. The only viable
justification for the corporate objective is that it increases social welfare in the utilitarian
sense. The thesis provides a timeline and synthesizing graphical presentation of the
typology of the shareholder value maximization. The typology and the timeline are
unprecedented contributions. The timeline helps to connect different data points to the
shareholder value maximization.
The overarching conclusion is that market failures and externalities are significantly
weakening the possibilities of the shareholder value maximization to successfully
maximize the social welfare. However, shareholder value maximization might still be the
best alternative providing the closest approximate of the maximum social welfare.