2000/01/01 by William Lazonick, Mary O'Sullivan, Mary O’Sullivan · 10 citations
Economics, Econometrics and Finance · Social Sciences · #Economic Theory and Institutions #Economic Theory and Policy #Political Economy and Marxism
paper · doi:10.1080/030851400360541
openalex publication_date 2000/01/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/31
The decade-long boom in the US stock market and the more recent boom in the US economy have fostered widespread belief in the economic benefits of the maximization of shareholder value as a principle of corporate governance. In this paper, we provide an historical analysis of the rise of shareholder value as a principle of corporate governance in the United States, tracing the transformation of US corporate strategy from an orientation towards retention of corporate earnings and reinvestment in corporate growth through the 1970s to one of downsizing of corporate labour forces and distribution of corporate earnings to shareholders over the past two decades. We then consider the recent performance of the US economy, and raise questions about the relation between the maximization of shareholder value and the sustainability of economic prosperity.