Publication
Chicago-Kent Law Review
Volume
99
Page
39
Year
2025
Abstract
There is presently a heated debate as to what a corporation’s purpose should be. The debate is between proponents of shareholder profit maximization (SPM), the idea that companies should be run exclusively in the financial interests of their shareholders, and proponents of stakeholderism, the idea that in addition to shareholder financial interests, companies should be run to further interests of other stakeholders. At least some of these other stakeholders are quite sympathetic and their interests, or more precisely, the respects in which their interests are purportedly being harmed (or at least insufficiently attended to), are quite salient. While SPM and stakeholder positions are at odds as a matter of first principles, a key advantage SPM theorists claim is instrumental. It is conceptually clear how SPM would work—the board determines what best maximizes shareholder financial value. If the board’s decisions or inaction are found wanting, its members are accountable to the shareholders for breaching their fiduciary duty. The market’s verdict, delivered via the company’s stock price, should also promote accountability, as should shareholders’ ability to replace poorly-performing directors. I argue here that SPM’s claim to being instrumentally superior to stakeholderism is significantly overstated.
This Article argues that the rhetorical battle between SPM and stakeholderism is being conducted simultaneously with, but in some important senses disconnected from, a real-world battle over particular stakeholder interests. My arguments may assist in reframing the debate to soften the lines between shareholder financial interests and other interests corporations affect.
Recommended Citation
Claire A. Hill, The Rhetoric and Reality of Shareholder Profit Maximization, 99 39 (2025), available at https://scholarship.law.umn.edu/faculty_articles/1106.
Rights
http://rightsstatements.org/vocab/InC/1.0/
