Thinkpiece No. 47

Stakeholder Value โ€“ Rhetoric or Reality

by Manfred Hoefle


Rediscovering the Proper Purpose of The Corporation

For the past forty years, stock-exchange listed public companies (capital corporations) have been managed as "profit machines" and assets to be bought or sold. The Shareholder Value Theory (SHV) justified this management behavior. SHV argues that top managers of a company must primarily have the interests of shareholders in mind when making decisions. The higher the shareholder value, the better it is for the company and management. This was a simple idea, easy to understand, and was adopted by many corporate managers. However, in a "revolutionary" statement on corporate governance in 2019, top U.S. CEOs pledged to renounce SHV. This thinkpiece exposes the gap between rhetoric and reality โ€“ and suggests how that gap could be closed.

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