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This paper tests the mimicking propositions from signalling theory as they relate to stated firm objectives and firm performance. We classify the corporate objectives of a large sample of firms and evaluate firm performance relative to these objectives. We find that poorly performing firms more frequently cite shareholder wealth maximization as their primary objective than do better performing firms. There is no evidence that firms citing a shareholder wealth maximization objective perform any better than firms with alternative objectives. Similar evidence is found for other common corporate objectives. Overall, our results are consistent with signalling theory in that non‐enforceable signals, such as proclamations of corporate objectives, are not credible signals for investors.

Corporate finance is under attack. Commentators mention that corporate managers have enriched themselves and shareholders, and in the process have failed to consider the interests of all stakeholders (Hennessy, 1989, Alkhafaji, 1989, Newton, 1989, Dunfee, 1989, Steidlmeier, 1989, Jones and Hunt, 1991). They cite the active corporate control market that produced hostile takeovers, leveraged buyouts, and corporate restructuring activity, all presumably causing a reduction in social welfare. This view is now beginning to permeate itself into the financial education debate. For example, Hawley (1991) suggests that financial educators are abdicating their responsibility of helping prepare corporate managers to recognize and deal with business ethics‐social responsibility effectively. Hawley proposes that the shareholder wealth maximization model for corporate management rationalizes the commission of unethical or socially irresponsible actions. Because of this ongoing criticism being levied against the practice of corporate finance, financial educators are now moving to incorporate ethics in the finance curricula. Although this move may be welcomed, we suggest that financial educators proceed with caution.

Discusses the agency issues underlying corporate governance, refering to research on managerial attitudes/incentives for maximizing shareholder value and pressures to align the interests of directors and shareholders. Reports a survey of finance executives in 175 large firms in 7 EU countries to analyse their strategies and the influence of pressure groups on strategy choice. Shows that market leadership and increased operating margins are the most successful operating strategies; changing productive capacity, generating new/better products and buying business with complementary products are the best investment strategies; and a leveraged buyout is the most effective capital strategy to maximize shareholder returns. Adds that UK managers (like US managers) have a shorter term focus than other European managers, perhaps because their relationships with institutional investors are less close.

This paper aims to examine two important issues in corporate social responsibility (CSR) scholarship. First, the study problematises CSR as a form of self-regulation. Second, the research explores how CSR strategies can enable firms to recognise and internalise their externalities while preserving shareholder value.

This study uses a tinged shareholder model to understand the interactions between an organisation’s CSR approach and the effect of relevant externalities on its CSR outcomes. In doing this, the case study qualitative methodology is adopted, relying on data from one Fidelity Bank, Nigeria.

By articulating a tripodal thematic model – governance of externalities in the economy, governance of externalities in the social system and governance of externalities in the environment, this paper demonstrates how an effective combination of these themes triggers the emergence of a robust CSR culture in an organisation.

This research advances the understanding of the implication of internalising externalities in the CSR literature in a relatively under-researched context – Nigeria.

The data of this study allows to present a governance model that will enable managers to focus on their overarching objective of shareholder value without the challenges of pursuing multiple and sometimes conflicting goals that typically create negative impacts to non-shareholding stakeholders.

In the aftermath of the global financial crisis (GFC) governments lost confidence in market fundamentalism and realised the inadequacies of regulatory measures. The purpose of this paper is to outline the proximate causes of the financial crisis of 2007‐2009 and to investigate the role of the shareholder wealth maximization (SWM) objective in the GFC.

The methodological procedure used in this paper is based on the historical case‐study approach. Case reviews of individuals and world‐level role models of the financial crisis have been cited in this paper. From this aggregated material, the paper examines the side effects of the SWM objective in order to develop the argument that the SWM objective played a role in the present crisis.

The case studies revealed that unethical behaviour, agency issues, CEO compensation, creative accounting and risk shifting are some of the side effects of SWM. These cases indicate that the assumptions on which SWM are based are questionable. Further, it can be argued that the root cause of the GFC is excessive greed and the single‐minded pursuit of SWM.

Though many studies have attempted to identify the proximate causes of the GFC, this paper is novel in highlighting the impact of the SWM objective function.

Sees the objective of teaching financial management to be to help managers and potential managers to make sensible investment and financing decisions. Acknowledges that financial theory teaches that investment and financing decisions should be based on cash flow and risk. Provides information on payback period; return on capital employed, earnings per share effect, working capital, profit planning, standard costing, financial statement planning and ratio analysis. Seeks to combine the practical rules of thumb of the traditionalists with the ideas of the financial theorists to form a balanced approach to practical financial management for MBA students, financial managers and undergraduates.

In Chapter 1, we critically reviewed the foundations of the free enterprise capital system (FECS), which has been successful primarily because of its wealth and asset accumulation potentiality and actuality. In this chapter, we critically argue that this capacity has been grounded upon the profit maximization (PM) theories, models, and paradigms of FECS. The intent of this chapter is not anti-PM. The PM models of FECS have worked and performed well for more than 200 years of the economic history of the United States and other developed countries, and this phenomenon is celebrated and featured as “market performativity.” However, market performativity has not truly benefitted the poor and the marginalized; on the contrary, market performativity has wittingly or unwittingly created gaping inequalities of wealth, income, opportunity, and prosperity. Critical thinking does not combat PM but challenges it with alternative models of profit sharing that promote social wealth, social welfare, social progress, and opportunity for all, which we explore here. Economic development without social progress breeds economic inequality and social injustice. Economic development alone is not enough; we should create a new paradigm in which economic development is the servant of social progress, not vice versa. Such a paradigm shift involves integrating the creativity and innovativity of market performativity and the goals and drives of social performativity together with PM, that is, from market performativity to social performativity.

Environment, social and governance (ESG) practices and shareholder activism are making significant strides in the decision-making policies and processes for all firms. This study aims to assess the impact of ESG on the dividend payout decisions of firms in India. In addition, it also aims to determine how shareholder activism influences the impact of ESG on dividend distribution decisions.

The authors gather relevant data from 78 non-financial listed Indian firms from 2016 to 2020. This study undertakes longitudinal data analysis, with fixed effects and calculation of robust standard errors. In addition, the slope test is used to examine the effects of the interaction between ESG and shareholder activism.

It is found in the study that not only does ESG positively impact the dividends but also shareholder activism positively impacts the dividend distribution decisions. Surprisingly, the authors see a significant but negative interaction impact of shareholder activism on the positive association of ESG with dividend distribution decisions. In other words, ESG impacts dividend distribution decisions differently at levels of shareholder activism. When shareholder activism is low, ESG positively influences dividend distribution decisions. However, when shareholder activism is high, ESG negatively influences dividend distribution decisions.

This result has significant implications for all the stakeholders, including shareholders. A shareholder expecting a dividend could decide correctly through the current study’s findings. In cases of high shareholder activism, investors may skip picking a stock if investors expect high ESG to influence the dividend distribution decisions favourably. On the contrary, investors may choose a stock if shareholder activism is low and all else remains the same.

Literature has some evidence of the influence of shareholder activism and ESG (in silos) on the dividend distribution decisions in the firms. This study attempts to contribute by bringing forth the interaction effects of shareholder activism and ESG on dividend distribution decisions.

Increases in stockholder wealth around leveraged recapitalization (recap) announcements are related more to reductions in the firm's financial slack than improvements in operating efficiency. Moreover, while recaps significantly reduce the firm's workforce and asset base, they do not improve operating profitability. These results support the argument (often espoused by non‐finance writers) that the market for corporate control is inefficient and, in many cases, outright destructive. Alternative systems of corporate governance should be explored.

In this study, I explore the link between workforce downsizing and the predominance of a corporate governance model that espouses a shareholder value maximization principle. Specifically, I examine how top managers’ shareholder value orientation affects the adoption of a downsizing strategy among large, publicly traded corporations in the United States. An analysis of CEOs’ letters to shareholders indicates that firms with CEOs who use language that espouses the shareholder value principle tend to have a higher rate of layoffs, after controlling for various indicators of the firm’s adherence to the shareholder value principle. The finding suggests that corporate governance models, particularly those advocated by powerful organizational elites, have a significant impact on workers by shaping corporate strategies toward the workforce. The key actors in this process were top managers who embraced the new management ideology and implemented corporate strategy to pursue shareholder value maximization.