Preface

Extract This book examines the relations between investors and firms in the context of the rise of shareholder value. The rise of shareholder value has been a major change in capitalist economies since the 1980s. Shareholder value underpins both recent finance theory and much corporate practice. It has profound consequences for economic behaviour, and for society as a whole. Shareholder value gives priority to the interests of a single stakeholder, the shareholder, in the governance of the firm, rather than to balancing the interests of multiple stakeholders. In the confident words of Hansmann and Kraakman (2004: 33), ‘there is no longer any serious competitor to the view that corporate law should principally strive to increase long‐term shareholder value’. The UK Department of Trade and Industry (DTI) presents ‘enlightened shareholder value’ as the cornerstone of company law reform. Shareholder value provides clarity of focus and rewards risk takers, generating an entrepreneurial business...