“It’s conventional wisdom in business circles today that corporate directors should “maximize shareholder value.” Corporations supposedly exist to serve shareholders’ interests, and not (or at least, not directly) those of executives, employees, customers, or the community. However, this shareholder-value dogma begs a fundamental question. What, exactly, do shareholders value?
Most shareholder-value advocates assume that shareholders care only about their own wealth. But it is increasingly accepted that the homo economicus model of purely selfish behavior doesn’t always apply. This possibility provides a challenge to the dominant business paradigm of “maximizing shareholder value:” the concept of the prosocial shareholder.”