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RIP Shareholder Primacy
Article

RIP Shareholder Primacy

Lenore Palladino
Boston Review, 2019
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Editorial Rating

8

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Recommendation

For decades, US corporations have adhered to the overarching rule of shareholder primacy – to maximize profits for their owners. In this astute analysis, economist Lenore Palladino challenges the validity of that narrow purpose, noting that shareholder primacy does not reflect the wealth created by employees and other stakeholders. She posits that new laws of governance can address the widening gap between rich and poor by distributing corporate gains more fairly among shareholders, management and workers.

Take-Aways

  • Shareholder primacy is still the cornerstone of corporate governance in the United States.
  • Shareholder primacy does not reflect the reality of how corporations create value.
  • Corporate ownership needs to include other stakeholders.

About the Author

Lenore Palladino is an assistant professor of economics at the University of Massachusetts.

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