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The Magnitude of Shareholder Value as the Overriding Objective in the UK - The Post-Crisis Perspective

Shuangge Wen Orcid Logo

Journal of International Banking Law and Regulation, Volume: 26, Issue: 7, Pages: 325 - 338

Swansea University Author: Shuangge Wen Orcid Logo

Abstract

In light of the vivid dynamism of corporate governance practices, a debate concerning the purposes of the corporation has been raging, particularly since the onset of the global financial crisis. This debate has concerned whether shareholder value should continue to take precedence in the UK – a lea...

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Published in: Journal of International Banking Law and Regulation
Published: Sweet & Maxwell (ie Thomson Reuters) 2011
URI: https://cronfa.swan.ac.uk/Record/cronfa7103
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spelling 2014-03-25T11:17:07.8709879 v2 7103 2012-02-13 The Magnitude of Shareholder Value as the Overriding Objective in the UK - The Post-Crisis Perspective 74b83f19a26c4aca40456680a19b7f1e 0000-0003-0574-7288 Shuangge Wen Shuangge Wen true false 2012-02-13 LAWD In light of the vivid dynamism of corporate governance practices, a debate concerning the purposes of the corporation has been raging, particularly since the onset of the global financial crisis. This debate has concerned whether shareholder value should continue to take precedence in the UK – a leading country using the Anglo-American corporate governance system. Providing insight into the future direction of Anglo-American corporate governance practice, this article seeks to identify the magnitude of the predominant objective for corporations – the shareholder value paradigm – in light of the recent global financial crisis, and the possible future development of the paradigm. Significantly, the discrepancy between short-term and long-term consideration of shareholders’ interests will be explored. It will be recognised that the scope of the shareholder value paradigm is not limited to short-run profit chasing. Shareholder value is not, as argued by some scholars, a key factor contributing to global turmoil. Rather, understatement of long-term concerns by businesses, and their narrow pragmatic preference for short-termism in interpreting shareholder value, are among the causes of the global crisis. In light of relevant corporate theories, the rationale behind shareholder value in the post-crisis context is justified on the basis of its strength in minimising principal-agent diversity and restoring investors’ confidence. Journal Article Journal of International Banking Law and Regulation 26 7 325 338 Sweet & Maxwell (ie Thomson Reuters) Corporate Governance; Shareholder Value; Financial Crisis 31 7 2011 2011-07-31 COLLEGE NANME Law COLLEGE CODE LAWD Swansea University 2014-03-25T11:17:07.8709879 2012-02-13T10:58:33.1400000 Faculty of Humanities and Social Sciences Hilary Rodham Clinton School of Law Shuangge Wen 0000-0003-0574-7288 1
title The Magnitude of Shareholder Value as the Overriding Objective in the UK - The Post-Crisis Perspective
spellingShingle The Magnitude of Shareholder Value as the Overriding Objective in the UK - The Post-Crisis Perspective
Shuangge Wen
title_short The Magnitude of Shareholder Value as the Overriding Objective in the UK - The Post-Crisis Perspective
title_full The Magnitude of Shareholder Value as the Overriding Objective in the UK - The Post-Crisis Perspective
title_fullStr The Magnitude of Shareholder Value as the Overriding Objective in the UK - The Post-Crisis Perspective
title_full_unstemmed The Magnitude of Shareholder Value as the Overriding Objective in the UK - The Post-Crisis Perspective
title_sort The Magnitude of Shareholder Value as the Overriding Objective in the UK - The Post-Crisis Perspective
author_id_str_mv 74b83f19a26c4aca40456680a19b7f1e
author_id_fullname_str_mv 74b83f19a26c4aca40456680a19b7f1e_***_Shuangge Wen
author Shuangge Wen
author2 Shuangge Wen
format Journal article
container_title Journal of International Banking Law and Regulation
container_volume 26
container_issue 7
container_start_page 325
publishDate 2011
institution Swansea University
publisher Sweet & Maxwell (ie Thomson Reuters)
college_str Faculty of Humanities and Social Sciences
hierarchytype
hierarchy_top_id facultyofhumanitiesandsocialsciences
hierarchy_top_title Faculty of Humanities and Social Sciences
hierarchy_parent_id facultyofhumanitiesandsocialsciences
hierarchy_parent_title Faculty of Humanities and Social Sciences
department_str Hilary Rodham Clinton School of Law{{{_:::_}}}Faculty of Humanities and Social Sciences{{{_:::_}}}Hilary Rodham Clinton School of Law
document_store_str 0
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description In light of the vivid dynamism of corporate governance practices, a debate concerning the purposes of the corporation has been raging, particularly since the onset of the global financial crisis. This debate has concerned whether shareholder value should continue to take precedence in the UK – a leading country using the Anglo-American corporate governance system. Providing insight into the future direction of Anglo-American corporate governance practice, this article seeks to identify the magnitude of the predominant objective for corporations – the shareholder value paradigm – in light of the recent global financial crisis, and the possible future development of the paradigm. Significantly, the discrepancy between short-term and long-term consideration of shareholders’ interests will be explored. It will be recognised that the scope of the shareholder value paradigm is not limited to short-run profit chasing. Shareholder value is not, as argued by some scholars, a key factor contributing to global turmoil. Rather, understatement of long-term concerns by businesses, and their narrow pragmatic preference for short-termism in interpreting shareholder value, are among the causes of the global crisis. In light of relevant corporate theories, the rationale behind shareholder value in the post-crisis context is justified on the basis of its strength in minimising principal-agent diversity and restoring investors’ confidence.
published_date 2011-07-31T03:08:47Z
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score 11.013507

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