shareholder value

Bonds Improve Institutional Investors’ Equity Monitoring

Todd Gormley and Manish Jha find that institutional investors holding bonds may experience greater investor attention and more active shareholding voting on their equity positions.

Managers Should Satisfy Only the Ethically Permissible Preferences of Shareholders

Oliver Hart and Luigi Zingales have proposed a revision to the dominant model of the objective of the firm, most famously defended...

How a Wave of Corporate Takeovers Ushered In the Gospel of Shareholder Value

In an excerpt from his new book, Ages of American Capitalism, economic historian Jonathan Levy explains how "financiers blew up the postwar...

Public’s Perception of Large Corporations Has Direct Impact on the Public Support of Corporate Bailouts

A new Stigler Center working paper finds that the likelihood of someone signing an online petition or contacting their US senators to...

Friedman’s Legacy: From Doctrine to Theorem

Friedman was more right than his detractors claim and more wrong than his supporters would like us to believe. However, after 50...

Bringing Ethics Back to Friedman’s Call to Purpose for the Next 50 Years

Fifty years ago, Friedman compellingly presented his argument for shareholder primacy. But as currently implemented, shareholder primacy threatens the unifying purposes that...

Milton Friedman and the Need for Justice

Milton Friedman predicated his shareholder value maximization credo on the strong implicit and explicit assumptions that the rules of society protect stakeholders...

Shareholder Value and Social Responsibility Are Not At Odds

Being socially responsible can, and frequently does, make good business sense. There are plenty of opportunities for companies to do well by...

A Challenge for Stakeholder Capitalism: Solving the Paradoxes of Voting

If corporations are to maximize shareholder welfare, managers need to discover what shareholders value; political theory shows how difficult this can be.

Corporations Are Governance Mechanisms, Not Shareholder Toys

Milton Friedman’s shareholder credo is simple and catchy but has shaky foundations. Corporate directors and officers are not agents of shareholders and...


Revising Guideline 6 With Evidence To Establish a Structural Inference for Input Foreclosure

Vertical merger law lacks the structural presumption of horizontal merger law, which shifts the burden from the government to the merging parties to provide evidence that a merger will not produce anticompetitive effects when it is known that the merger will substantially increase market concentration. To improve Guideline 6 of the draft Merger Guidelines concerning vertical foreclosure, Steven Salop develops a three-factor criteria with which the government antitrust agencies can show an analogous structural “inference” that shifts the burden of evidence to the merging parties.

How US Antitrust Enforcement Against Xerox Promoted Innovation by Japanese Competitors

Xerox invented modern copier technology and was so successful that its brand name became a verb. In 1972, U.S. antitrust authorities charged Xerox with monopolization and eventually ordered the licensing of all its copier-related patents. As new research by Robin Mamrak shows, this antitrust intervention promoted subsequent innovation in the copier industry, but only among Japanese competitors. Nevertheless, their innovations benefited U.S. consumers.

Revising the Merger Guidelines To Return Antitrust to a Sound Economic and Legal Foundation

The draft Merger Guidelines largely replace the consumer welfare standard of the Chicago School with the lessening of competition principle found in the 1914 Clayton Act. This shift would enable the Federal Trade Commission and Department of Justice Antitrust Division to utilize the full extent of modern economics to respond to rising concentration and its harmful effects, writes John Kwoka.

How Anthony Downs’s Analysis Explains Rational Voters’ Preferences for Populism

In new research, Cyril Hédoin and Alexandre Chirat use the rational-choice theory of economist Anthony Downs to explain how populism rationally arises to challenge established institutions of liberal democracy.

The Impact of Large Institutional Investors on Innovation Is Not as Positive as One Might Expect

In a new paper, Bing Guo, Dennis C. Hutschenreiter, David Pérez-Castrillo, and Anna Toldrà-Simats study how large institutional investors impact firm innovation. The authors find that large institutional investors encourage internal research and development but discourage firm acquisitions that would add patents and knowledge to their firms’ portfolios, hampering overall innovation.