In his forthcoming article, “Shareholder Wealth Maximization: A Schelling Point,” my MC-Law colleague, Professor Martin Edwards, offers a new contribution to the long-standing debate concerning shareholder wealth maximization and corporate purpose. (See, e.g., here, here, here, and here.) Professor Edwards is not simply offering a rehearsal of the principled justifications for shareholder wealth maximization as the preeminent corporate purpose. Instead, he proposes a descriptive explanation for why it happened to become the received norm. Though Professor Edwards notes that reformers have offered compelling arguments for why shareholder wealth maximization may be suboptimal, he suggests that, as a Schelling point, it continues to function as a value-creating equilibrium term in the corporate bargain. The article will appear in Volume 74 of the St. John’s Law Review (forthcoming, 2021). Here’s the abstract:

Legal scholars have long debated the nature, meaning, efficacy, and even the very existence of the shareholder wealth maximization norm.  Those who model the corporation in terms of its economic efficiency tend to defend it, while those skeptical of it have made a formidable case that corporate governance might be better if managers and directors focused more on worker wealth, environmental sustainability, and various other matters…