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Articles by Lynn A. Stout
Are U.S companies legally obligated to maximize profits for shareholders?
The Shareholder Value movement has been influential in promoting the idea that cashflow to shareholders should be the focus of senior management in quoted companies.If these companies talked about shareholder value – and increasingly they did – it was an instance of Franklin’s Gambit, a legitimising rhetoric rather than a real guide to action.And the more shareholder value became a guide to action, the worse the outcome.Second Update A recent article by the previously mentioned Lynn Stout has...
Essential business book picks from Ivey faculty
Stephen Foerster’s pick Stephen Foerster, HBA ’81, is a professor of Finance Undiversified: The Big Gender Short in Investment Management by Ellen Carr and Katrina Dudley When Stephen Foerster was approached to help create and co-direct Ivey’s new Women in Asset Management program to address the industry’s gender gap, he did what came natural as a finance expert – he looked for insights from the numbers.
5 No-Fuss Self-Care Ideas for Introverts
I live with an extrovert. My husband gets his energy from being around people and goes stir crazy when alone for too long. I’m the opposite. I’m an introvert who needs alone time regularly in order to feel grounded. Through the years, we’ve managed to find a comfortable compromise in our relationship. I work very hard to avoid being passive-aggressive and just say what I need. He’s learned not to take it personally when I say I need to be alone. It wasn’t always this way.
How can a successful company embrace purpose?
Why companies need to strive for more than just profit by Janet Anderson artworks by Camille Kachani Read more about the topic "The purpose principle – missions give businesses strength" The long-held assumption that businesses exist simply to make money for shareholders is being challenged. There is a growing trend to focus on the longer term and the wider social impact that a business can have. How has this shift come about? And, more importantly, how can a successful company embrace "purpose"?
Does Wall Street Do Anything Useful? | RealClearMarkets
No Wonder Everyone Thinks Wall St. Is Insane The Reformed Broker
Does Wall Street Do “God’s Work”? Or Even Anything Useful? -
Bank executives frequently proclaim that Wall Street is vital to the nation’s economy and performs socially valuable services by raising capital, providing liquidity to investors, and ensuring that securities are priced accurately so that money flows to where it will be most productive. There’s just one problem: the Wall Street mantra isn’t true.
How Hedge Funds Create Criminals
Hedge funds are playing the role of Wall Street villain again. This time, the charge is rampant insider trading. First came the 2009 arrest of Raj Rajaratnam, founder of the Galleon Group. Then came the November 22, 2010 raids of three hedge fund headquarters by FBI agents who seized documents and confiscated BlackBerries. Now authorities are serving subpoenas on other, larger hedge and mutual funds.
Economists Assume We're Selfish Creatures and Incentivize an Immoral Economy
What’s the best way to get people to behave themselves? Legal and policy experts often assume people are basically selfish creatures who respond only to punishments and rewards, and who can’t be trusted to do a good job or refrain from lying, cheating and stealing unless given the right “incentives.” Are CEOs neglecting their firms? Tie their pay to share price with stock grants and options. Are America’s children failing to learn their ABCs?
Samuelson and Stout Say Executives Should Be Compensated for Contributing to Companies' Long-Term Health
A last-minute provision added to the stimulus bill President Barack Obama signed into law on Feb. 17 restricts companies that accept federal bailout funds from paying performance bonuses that exceed one-third of an executive's total annual compensation. This punitive measure may be understandable as a reflection of populist fury over bonuses being paid to heads of failing companies that received billions in taxpayer money.
The Shareholder Value Myth
Shareholder-value thinking dominates the business world today. Professors, policymakers, and business leaders routinely chant the mantras that public companies “belong” to their shareholders; that the proper goal of corporate governance is to maximize shareholder wealth; and that shareholder wealth is best measured by share price (meaning share price today, not share price next year or next decade).
Regulate OTC Derivatives By Deregulating Them
Abstract When credit markets froze up in the fall of 2008, many economists pronounced the crisis inexplicable and unforeseeable. Lawyers who specialize in financial regulation, and especially the small cadre who specialize in derivatives regulation, knew better.That's because the roots of the catastrophe lay not in changes in the markets, but changes in the law.
The Shareholder Value Myth
By Lynn A. Stout Shareholder primacy theory is suffering a crisis of confidence. In The Shareholder Value Myth: How Putting Shareholders First Harms Investors, Corporations, and the Public Lynn Stout discusses how the traditional managerial focus on the shareholder’s interest can be harmful for the corporation and even for shareholders themselves and how it is more valuable to spread the focus over several objectives.
The Shareholder Value Myth
General governance, Public firms, Shareholder activism, Shareholder value More from: Lynn Stout Lynn Stout is the Distinguished Professor of Corporate and Business Law at Cornell Law School. This post discusses Professor Stout’s book The Shareholder Value Myth, available for purchase here and for preview here. Shareholder-value thinking dominates the business world today.
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