Shareholder vs. Stakeholder capitalism
Investors Should Engage With Firms They Want To Go Green, Not Divest
How can investors use capital markets to encourage emissions reductions? In new research, Matthew E. Kahn, John G. Matsusaka, and Chong Shu examine whether public pension funds are more effective in mitigating pollution when they divest from fossil fuel companies or actively engage their management.
How To Ensure Industrial Policy Promotes Public Over Private Gain
Industrial policy was once so out of fashion that it was jokingly called “the policy that shall not be named.” Now it’s back in...
Shareholder Democracy Doesn’t Work. Here’s How It Can.
An opinion piece by Oliver Hart and Luigi Zingales describes how a new voting mechanism could help individual investors persuade companies to act in...
Have Business Roundtable Companies Lived Up to Their Stakeholder Commitments?
In 2019, more than 100 CEOs of US public companies signed a Business Roundtable statement in which they pledged to deliver value to all...
How Enlightened is Enlightened Shareholder Value?
There has been growing support for replacing the traditional corporate purpose with so-called “enlightened shareholder value,” which would guide firms to consider stakeholder interests...
The Flaws and Limits of ESG-Based Compensation
Companies increasingly use ESG metrics in their compensation packages for CEOs. A new empirical study suggests that this practice has questionable promise and produces...
How the Covid-19 Pandemic Put Corporate Stakeholder Promises to the Test
Prior to the outbreak of Covid-19, corporate leaders pledged to look after all stakeholders, not just deliver value to shareholders. Did they live up...
The Social Responsibility of Business Includes Profits
Profits these days are often seen as a dirty word, but it is wrong to demonize profits. A company’s responsibility is not to sacrifice...
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 by Milton...
What Stakeholder Capitalism Can Learn From Jensen and Meckling
Jensen and Meckling’s 1976 article is an academic classic, but heavily criticized by stakeholder capitalists for arguing that corporate structures should be designed to...
