Governance & Policy
Shareholder Value
Definition
Shareholder value is the doctrine that the primary — in strong form, sole — responsibility of corporate management is to maximise returns to shareholders. Associated with Milton Friedman's 1970 essay and the Jensen-Meckling agency theory, it dominated Anglo-American corporate governance from the 1980s, aligning executive pay with share prices and framing takeovers, buybacks and restructuring as value-creation.
References
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This reference provides supporting context for how “Shareholder Value” is defined and used.
Overview
How it is used
The concept anchors debates on corporate purpose, ESG's legitimacy, fiduciary duty, benefit-corporation statutes and sustainable finance reform.
Why it matters
The shareholder-versus-stakeholder question is the constitutional debate of capitalism; where it settles determines how far sustainability can go inside firms.