From Prof. Colin Mayer of Oxford’s Saïd Business School, author of the book in the image:
“The corporation is a rent extraction vehicle for the shortest-term shareholders.”
That’s quite a statement, and it comes via Martin Wolf in the Financial Times. The FT article discussing shareholder value is excellent, and right up TJN’s street. It contains introductory gems such as:
“Almost nothing in economics is more important than thinking through how companies should be managed and for what ends. Unfortunately, we have made a mess of this. That mess has a name: it is “shareholder value maximisation”.”
As we have remarked many times before, short-term shareholder maximisation has often been used as a justification for aggressive tax avoidance (which journalists routinely but incorrectly described as ‘perfectly legal’) and many other nefarious acts. We have also demonstrated, among other things, that corporate managers have no fiduciary duties to avoid tax.
But read the whole article: as we said, it’s another excellent piece by the FT’s chief economics correspondent.