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Shareholder Wealth Maximization: Variations On A Theme, Dalia Tsuk Mitchell

GW Law Faculty Publications & Other Works

In the debate over whether a corporation’s primary purpose is to make money for shareholders or protect the interests of all stakeholders, including employees and customers, some argue that corporate law requires directors and corporations to serve primarily shareholder economic interests. This paper's review of the history of corporate law suggests otherwise. Analysis of the cases reveals that judges did not sanction “shareholder wealth maximization,” but used that rhetoric to legitimate management’s dominion. Early in the twentieth century, amidst the rise of the publicly held corporation, insisting that corporations maximize profit for their shareholders was a means of protecting minority …