The Shareholder Value Mess (And How To Clean It Up) – Accounting, Economics, and Law: A Convivium – article

The Shareholder Value Mess (And How To Clean It Up)

Jean-Philippe Robé | Accounting, Economics, and Law: A Convivium

2019-10-22

With an enhanced accounting system, we can rely on the most formidable instrument invented to allocate resources among firms: the market. The financial markets are not fulfilling their role today because their operators are not provided with the right information. The market can assess which firms are better at producing shareholder value. But as we know, this concept is different from the concept of real value: firms can create shareholder value while not creating any real value or even while destroying real value. We need firms and their corporate structure to improve the information given to market participants for them to be in a position to identify and promote the firms which are better at producing real value as opposed to mere « shareholder value ». And start cleaning up the mess.

Bookmark

Your comment

Scroll to Top