Maximizing Shareholder Value: What Are Shareholders' Interests?
Author:Scully, Maureen Source: The Aspen Institute Center for Business Education's Corporate Governance and Accountability Project Year: 2005
This Teaching Module was prepared by Dr. Maureen Scully, Assistant Professor of Management at UMass Boston's College of Management and Consultant to the Aspen Institute Business and Society Program, as part of CasePlace.org's Corporate Governance and Accountability Project.
Maximizing shareholder value (MSV) guides many business decisions and quickly becomes part of business school students' vocabulary. It is important to understand shareholders' interests more precisely. This Teaching Module considers that shareholders might prefer maximization at the level of their portfolio or an industry, not at the individual firm level. It focuses on the underlying question: What are shareholders' interests, specifically when shareholders: • Hold diversified portfolios? • Hold indexed funds? • Are also consumers and citizens? • Have long-run as well as short-run time horizons?