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“Our purpose is to maximise shareholder value” Two books to buy your CEO

Sometimes, a short article really nails it.

This is one of those.

What does it nail?

The myth that the purpose of business, nay the duty of managers, is to maximise shareholder value.

And that is a myth.

A con, a fraud, a canard. You get the idea.

Do a little digging, and the proponents of the idea, from back in the 1960s, 1970s, and particularly the 80’s and 90’s, are revealed.

My own reading into this area tallies with what this excellent Atlantic article says. Hence the blog.

I won’t repeat the argument: It’s too well said in the short Atlantic piece, which you must read here.

There are two books suggested in the piece that you might want to give to your CEO, along with a print out of the linked article above.

The books are these:

Firm Commitment: Why the Corporation Is Failing Us and How to Restore Trust in It

The Shareholder Value Myth

(A third is Collin’s Good to Great but I assume you know about that one)  

1 Comment

  1. Tony, you left out a great book from your side of the pond — Obliquity by John Kay. It is a little less recent, but as pertinent as the others. He also makes the point that it is also impossible to say what "profit" means since a company's profitability is based on a range of assumptions and accounting choices that lead to a wide range of answers about a firm's profitability.

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