Shareholder value and corporate governance: some tricky questions
- 1 January 2000
- journal article
- research article
- Published by Taylor & Francis in Economy and Society
- Vol. 29 (1) , 146-159
- https://doi.org/10.1080/030851400360596
Abstract
Shareholder value is not a new idea. But it entails a shift in control over businesses with far-reaching macro-economic consequences. They are mostly apparent in the USA. The required financial return spurs a momentous equity price appreciation which discourages private saving. Meanwhile, the achievement of a financial profitability consistently above the economic rate of return on real capital induces a rising leverage cum share buybacks. The financial dynamic is highly procyclical and generates a financial fragility which questions the hypothetical advantage of private pension funds over pay-as-you-go retirement systems.Keywords
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