Should 'Shareholder Value' Rule Business Thinking?
Episode Description
Often, shareholder value trumps all when it comes to measuring corporate success. But focusing too much on the short term can hurt a business over the long run, says Wharton's Eric W. Orts. đź“‚ Finance & Accounting;Management
Brief Summary
Eric Ortz critiques the shareholder value model in corporate governance, advocating for broader stakeholder considerations in business practices.
Key points
- The Limitations of Shareholder Value. Eric Ort discusses how focusing solely on shareholder value can lead to corporate fraud and dysfunction.
- Rethinking Business Objectives. Ort argues for a broader understanding of business purposes beyond just maximizing shareholder value.
Ask about Knowledge at Wharton
Episode highlights
- The Limitations of Shareholder ValueEric Ort discusses how focusing solely on shareholder value can lead to corporate fraud and dysfunction.“The shareholder value arguments have gotten us into trouble.”2:15Oct 30, 2013
- Rethinking Business ObjectivesOrt argues for a broader understanding of business purposes beyond just maximizing shareholder value.“We have to have a more complex understanding of incentives.”8:01Oct 30, 2013
Tension
40/ 100Low tension
