In search of an alternative to shareholder value maximization

ESSEC Working paper. Document de Recherche ESSEC / Centre de recherche de l'ESSEC ISSN : 1291-9616 WP1108This paper argues that mainstream economic the- ory, far from providing an indisputable plea in favor of shareholder value-maximization, o ers striking arguments showing quite the opposite: pro t maximization cannot be a legitimate prioritar- ian goal for private rms. This opens the door for a widening of a company's goal. We argue that it should include the con- cern of all the stakeholders of a company, and cannot be ade-quately addressed uniquely by Pigouvian taxes or by property rights. Coming to terms with this broad understanding of a com-pany's goal should imply the internalization of the stakeholders' concern within the legal structure of the rm | as in the case of the scic in France or the cic in the UK