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Shareholder Wealth Maximization, Multinational Corporations and the Developing World

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Chapter Summary

In the modern capitalist system corporations have become the driving force behind trade and commerce. The principle of shareholder wealth maximization (SWM) holds that a maximum return to shareholders is and ought to be the objective of all corporate activity. The earlier legal view of the corporation as a form of property that is subject to ownership rights has given way to a contractarian model, which sees the corporation as a nexus of contracts. The stakeholder theory of corporate responsibility is a developing response to the view that firm should be run in such a way as to maximize the wealth of the shareholders. The people and communities in the developing world find themselves in the position of stakeholders in relation to these multinational corporations. Performativity indexing is closely associated with the concepts of Quality control and Quality assurance originally finding application in the manufacturing industry.

Keywords: agency theory; contractarian legal model; developing world; multinational corporations; performativity indexing; shareholder wealth maximization (SWM); stakeholder theory

10.1163/ej.9789004166943.i-296.18
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