Shareholder value maximization is defended as a social-welfare criterion.

Evidence

The intuition behind this criterion is simply that (social) value is created when a firm produces an output or set of outputs that are valued by its customers at more than the value of the inputs it consumes (as valued by their suppliers) in such a production. Firm value is simply the long-term market value of this stream of benefits” ( Jensen 2002, pp. 237–39). According to this view, shareholder value isn’t good just for shareholders, but for society overall. — Gerald F. Davis & Suntae Kim, Financialization of the Economy, 63

Categorization

• DEFINE: Clarifies the formal justification offered for shareholder value as social value.
• XREF: connects to: Financial valuation theory legitimizes financiers’ power by claiming they optimize resource allocation. — Ève Chiapello, Financialisation of Valuation, 36; Shareholder primacy rests on a single-valued objective argument. — Gerald F. Davis & Suntae Kim, Financialization of the Economy, 58; Shareholder-value maximization went unanswered by any countervailing force — Shoshana Zuboff, The Age of Surveillance Capitalism, 570 (+3 more)

Related

• Shareholder primacy rests on a single-valued objective argument. (similarity 0.88)
• Shareholder-value maximization went unanswered by any countervailing force (similarity 0.86)
• Finance theory’s investor-centric view shaped American corporate governance toward value maximization (similarity 0.80)
• Financial valuation theory legitimizes financiers’ power by claiming they optimize resource allocation. (similarity 0.80)

Broader Connections

• Shareholder-value maximization went unanswered by any countervailing force #corroborates (0.85) — Shoshana Zuboff, The Age of Surveillance Capitalism, 570
• Profit maximization is antithetical to citizen well-being #contradicts (0.80)
• Economic justifications let financiers view profit-seeking as serving the common good #corroborates (0.80)
• Finance theory’s investor-centric view shaped American corporate governance toward value maximization #corroborates (0.78) — Donald MacKenzie, An Engine, Not a Camera, 1173