Reclaiming the Idea of Shareholder Value

Corporate governance issues are constantly in the headlines. Activist investors challenge management strategies. Investors and others ask why companies binge on buybacks while skimping on value-creating investment opportunities. But discussions of corporate governance invariably miss the real problem: most public companies have extensive governance procedures but no governing objective. As a result, there is no sound basis for stakeholders, including shareholders, to assess the performance of the company and its executives.