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Cited by 1,970Corporate Finance and GovernanceHousing, Finance, and NeoliberalismCorporate Governance and Financial Management

Maximizing shareholder value: a new ideology for corporate governance

Lazonick, William, O'Sullivan, Mary·2000·Economy and Society
DOI 10.1080/030851400360541
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Abstract

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.

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Crossref · 10.1080/030851400360541

Cites

2 of 2 references verified0 citation errors · 0 not checkable

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  • The behaviors of firms in the post-1980s changed towards maximization of shareholder value and became entrenched as a principle of corporate governance.

    “For instance, Lazonick and O'Sullivan (2000) note that the behaviors of firms in the post-1980s have changed towards more oriented to the maximization of shareholder value and have entrenched as a principle of corporate governance.”

    From Financialization and the Labor Share of Income (2019) · cites this paper as Lazonick and O'Sullivan (2000)

  • The 'real' sector is increasingly embracing rent extraction business models.

    “The 'real' sector is also increasingly embracing rent extraction business models”

    From Mapping modern economic rents: the good, the bad, and the grey areas (2023) · cites this paper as Lazonick and O'Sullivan, 2000

  • Modern shareholders (or the funds that manage shares) have come to place a strong emphasis on the short-term value of the companies' share price above and beyond long-term investments.

    “In particular, modern shareholders (or more precise the funds that manage shares) have come to place a strong emphasis on the short-term value of the companies' share price above and beyond long-term investments (Lazonick and O'Sullivan, 2000;Haldane, 2011).”

    From Mapping modern economic rents: the good, the bad, and the grey areas (2023) · cites this paper as Lazonick and O'Sullivan, 2000

Cites

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Research works printed but not linked: 5

  1. London: Penguin.
  2. Cambridge, MA: MIT Press.
  3. Washington, DC: AEI Press.
  4. American Economic Review 63: 134-9.
  5. Accounts, Flows and Outstandings, Washington, DC: US Government Printing Office. US Bureau of Labor Statistics (various years) Employment and Earnings, Washington, DC: US Government Printing Office. US Bureau of the Census (1976) Historical Statistics of the United States from the Colonial Times to the Present, Washington, DC: US Government Printing Office. US Congress (various years) Economic Report of the President, Washington, DC: US Government Printing Office. US Department of Commerce (various years) Statistical Abstract of the United States, Washington, DC: US Government Printing Office. Weinstein, M. and Kochan, T. (1995) ‘The limits of diffusion: recent developments in industrial relations and human resource practices’, in R. Locke, T. Kochan and M. Piore (eds) Employment Relations in a Changing World, Cambridge, MA: MIT Press.

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Authors
Lazonick, W., & O'Sullivan, M.
ORCID
Lazonick, William
Venue
Economy and Society
Publisher
Informa UK Limited
Published
2000-01
Volume
29
Issue
1
Pages
13-35
ISSN
  • 0308-5147 (ISSN-L)
  • 1469-5766
DOI
10.1080/030851400360541
OpenAlex
W4254928272
Semantic Scholar
009bf76a12cc7f138e729ae38b96c780398d3920
Cited by
1,970
References
2
Citations by year
2026: 96 · 2025: 88 · 2024: 130 · 2023: 132 · 2022: 124 · 2021: 171 · 2020: 128 · 2019: 152 · 2018: 121 · 2017: 127 · 2016: 85 · 2015: 78 · 2014: 62 · 2013: 66 · 2012: 56
FWCI
85.97
Type
journal article
Language
en
Open access
closed
Locations
Economy and Society (publishedVersion)
Funders
European Commission
Topics
  • Social Sciences › Business, Management and Accounting › Accounting › Corporate Finance and Governance
  • Social Sciences › Economics, Econometrics and Finance › Finance › Housing, Finance, and Neoliberalism
  • Social Sciences › Business, Management and Accounting › Strategy and Management › Corporate Governance and Financial Management
Keywords
shareholder wealth maximization, corporate governance, business strategy, earnings retention, reinvestment, downsizing, stock market boom, economic prosperity, sustainability of economic growth, United States

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