Canadian Investment Review

Shareholder Value and Social Good

Written by Caroline Cakebread on Thursday, May 1st, 2014 at 6:19 am

Protest Occupy Wall StreetCan maximizing shareholder value maximize social value? According to new research from Randall Morck at the University of Alberta, it can indeed. While documentaries like The Corporation have sought to portray corporations as organizations bent on delivering returns to shareholders at any and all costs, Morck takes a different approach. He looks at the issue from the standpoint of good corporate governance: “If good corporate governance is defined as maximizing a firm’s contribution to overall social welfare, shareholder value maximization can achieve this only if capital markets are functionally efficient, a concept quite distinct from the definitions of market efficiency usually found in finance textbooks.” Morck has some suggestions for getting there in his paper which can be found in Volume 22, Issue 3 of Corporate Governance: An International Review. More details here.

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