ESSEC Working Papers,
ESSEC Research Center, ESSEC Business School

Abstract: This 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 prioritarian goal for private rms. This opens the door for a widening of a company's goal. We argue that it should include the concern of all the stakeholders of a company, and cannot be adequately addressed uniquely by Pigouvian taxes or by property rights. Coming to terms with this broad understanding of a company's goal should imply the internalization of the stakeholders' concern within the legal structure of the firm as in the case of the scic in France or the cic in the UK.

Keywords: Corporate social responsibility; shareholder value; stakeholder value; incomplete markets; limited liability; property rights; collateral; cooperative

JEL-codes: A12; D21; D63; K11; L21; L33; M14

29 pages, July 8, 2011

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