On August 10, 2012, Joe Nocera an op-ed columnist for The New York Times writes:
Shareholder value has long since become the mantra of the business culture. Corporate boards shower executives with stock options to “align” them with shareholders. “Underperforming” companies find themselves under siege from activist investors. Increasing shareholder involvement is viewed as the way to fix whatever ails corporate governance. Over time, “maximizing shareholder value” became viewed as the primary task of the corporation.
One of their arguments is that the calls for increased shareholder democracy are misguided; shareholders, they write, simply aren’t particularly well-suited to be “corporate bosses.” They are too diffuse, and too short-term-oriented, especially now that high-frequency trading dominates the market. Indeed, despite the increased emphasis on shareholders the past few decades, companies haven’t gotten noticeably better.
Lorsch, for his part, says that he believes that “the function of business in a society is not just a return to investors, but to provide goods and services, provide employment, pay taxes, and so on.” A half-dozen other business school professors I spoke to held similar views. To the extent this new movement is taking root, it is in business schools.
Still, it is hard to know yet whether this new movement will have legs. Measuring chief executives on the basis of their companies’ stock prices is easy to understand — that was always part of its appeal. Those who want to change that, including Lorsch and Fox, have struggled to come up with breakthrough ideas that would be similarly appealing. Besides, shareholder value is so deeply entrenched, it will be difficult to dislodge.
http://www.nytimes.com/2012/08/11/opinion/nocera-down-with-shareholder-value.html?smid=fb-share
