Governance & Policy
Shareholder Value
The doctrine that a corporation's overriding purpose is to maximise returns for its shareholders — theorthodoxy stakeholder and sustainability thinking challenge.
Definition
Shareholder value is the doctrine that the primary — in strong form, sole — responsibility of corporate management is to maximise returns to shareholders. Associated with Milton Friedman's 1970 essay and the Jensen-Meckling agency theory, it dominated Anglo-American corporate governance from the 1980s, aligning executive pay with share prices and framing takeovers, buybacks and restructuring as value-creation.
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