Shareholder Value

 Essay upon Shareholder Value

The objective of the corporation:

Shareholder-value maximization?

Financial Working Paper N°. 95/2005

Revised variation: February 06\

Petra Joerg

Institut für Finanzmanagement, Universität Bern

Claudio Loderer

Institut für Finanzmanagement, Universität Bern

Lukas Roth

The Philadelphia State School

Urs Waelchli

Institut für Finanzmanagement, Universität Bern

© Petra Joerg, Claudio Loderer, Lukas Roth and Urs

Waelchli 2006. All rights reserved. Brief sections of

text, not to exceed two sentences, may be offered

without precise permission so long as full credit,

including © notice, has to the resource.

This newspaper can be downloaded without charge from:

ECGI Working Paper Series in Finance

The goal of the corporation:

Shareholder-value maximization?

Operating Paper N°. 95/2005

Initially version: August 2005

This kind of version: March 2006

Petra Joerg

Claudio Loderer

Lukas Roth

Urs Waelchli

All of us wish to say thanks to Nancy Macmillan for the fantastic editorial support. We received many useful comments coming from Max Bazerman, Lucian Bebchuk, Sabine Boeckem, Ingolf Dittmann, Espen Eckbo, Christoph Hinkelmann, Andrew Inkpen, Mike Jensen, David Kelsey, Diego Liechti, John McConnell, Frank Milne, Bob Monks, Ted Moorman, Urs Peyer, Caspar Increased, Carolina Descarga, Steve Sharpe, Meir Statman, Mich Tvede, Jim Walsh, Dariusz Wojcik, Yin-Hua Yeh, and participants at the 2005 European Monetary Management Symposium on Euro Corporate Governance. We are pleased to Regula Baertschi, Sue Fuhrer, Corina Steiner, and Manuela Strasser for study assistance.

© Petra Joerg, Claudio Loderer, Lukas Roth and Urs Waelchli 2006. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without precise permission so long as full credit rating, including © notice, has to the resource.


Apparently, there is popular factual and normative general opinion that firms maximize shareholder value or perhaps should do so. The logic of that claim can be flawed. We also argue that the maximization of shareholder benefit at large is an ill-defined corporate target. Moreover, all of us report evidence from company Web sites that managers are not even willing to pay lip in order to shareholder-value optimization. We are struggling to tell what alternative corporate and business target ideal society. The logic of competition, however , demands that managers fulfill the restrictions enforced by end result markets and respond to the requests of enormous current and potential investors.

Keywords: Aktionar value, company target, company governance JEL Classifications: G30, K00, L20

Petra Joerg

Institut für Finanzmanagement, Universität Bern

Engehaldenstrasse 4

3012 Bern


phone: +41 31 631 4533, fax: +41 thirty-one 631 8421

e-mail: petra. [email protected] unibe. ch

Claudio Loderer*

Institut für Finanzmanagement, Universität Bern

Engehaldenstrasse four

3012 Bern


cellphone: +41 thirty-one 631 3775, fax: +41 31 631 8421

email-based: claudio. [email protected] unibe. ch

Lukas Roth

The Smeal College of Business

The Pennsylvania Point out University

335 Business Building University Playground

PA 16802

phone: plus1 814 863 9969, send: +1 814 865 3362

e-mail: lukas. [email protected] edu

Urs Waelchli

Institut für Finanzmanagement, Universität Bern

Engehaldenstrasse 4

3012 Bern


phone: +41 31 631 3478, fernkopie: +41 23 631 8421

e-mail: urs. [email protected] unibe. ch

*Corresponding Author

The objective of the corporation: Shareholder-value maximization?

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