This short piece is essential reading. It succinctly sums up the challenge posed by the question of ‘shareholder primacy’ — that is, the question of whether “shareholders come first” from the point of view of corporate objectives, and just what that means. >>>
LINK: Should Companies Maximize Shareholder Value?
…Who owns and controls a company? The formal answer of economists has been that shareholders own and control a company. This is simplistic. Shareholders do not own companies in the normal sense of ownership. They cannot walk into the property they ‘own’ and demand that ‘their’ employees do certain things, as they could in a shop or a farm that they owned. Indeed, all they can do — and, for the most part, only with difficulty — is to help change management by voting or selling their shares. This is a highly qualified form of ownership….
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