New Book by Lynn Stout Debunks The Shareholder Value Myth
Ithaca, NEW YORK, July 11, 2012
“It should be obvious to anyone who reads the newspapers or has a 401k that our corporate sector is not performing for investors the way we would like it to,” says Cornell Law School’s Lynn Stout, Distinguished Professor of Corporate & Business Law. In her new book, The Shareholder Value Myth: How Putting Shareholders First Harms Investors, Corporations, and the Public (Berrett-Koehler Publishers, May 2012), Stout points the finger for this shortfall directly at a tenet of corporate governance widely accepted by executives, investors, and the business press.
“This book argues that the reason [for corporate underperformance] can be traced not to flawed individuals (greedy CEOs, out-of-touch directors) but to a flawed idea — the idea that corporations are run well when they are run to maximize ‘shareholder value’ as measured by stock price,” says Stout. “It shows how the idea of shareholder value rests on a conception of shareholder interest that is short-sighted, opportunistic, self-destructive, and antisocial, and suggests ways that corporations can be run to better serve not only investors but employees, customers, and the broader society."
An internationally recognized expert in the fields of corporate governance, securities regulation, financial derivatives, law and economics, and moral behavior, Stout also serves as an Independent Trustee and Chair of the Governance Committee for the Eaton Vance family of mutual funds. She is a member of the Board of Advisors for the Aspen Institute’s Business & Society Program, and a Research Fellow for the Gruter Institute for Law and Behavioral Research.