THE CORPORATE OBJECTIVE REVISTED: PART I

Abstract

Corporate objective, namely, for whose interests should a company be run, is the most important theoretical and practical issues confronting us today, as the core objectives animate or should animate every decision a company makes. Despite decades of debate, there is no consensus regarding what the corporate objective is or ought to be. Contrary to the widely held belief that the corporate objective should be shareholder wealth maximisation (SWM), this paper seeks to demonstrate that SWM is unsuitable by exploring its main problems. As an antithesis to SWM, stakeholder theory generally emerges and develops to be an alternative. Justifications will be offered from different aspects. In particular, its advantages in solving short-termism and externalisation compared with SWM will be focused on.