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Shareholder value maximisation, stock market and new technology: should the US corporate model be the universal standard

Author

Listed:
  • Ajit Singh
  • Jack Glen
  • Ann Zammitt
  • Rafael De Hoyos
  • Alaka Singh
  • Bruce Weisse

Abstract

In 1992 a blue-ribbon group of US economists led by Michael Porter concluded that the US stock market-based corporate model was misallocating resources and jeopardising US competitiveness. The faster growth of US economy since then and the supposed US lead in the spread of information technology has brought new legitimacy to the stock market and the corporate model, which is being hailed as the universal standard. Two main conclusions of the analysis presented here are: (a) there is no warrant for revising the blue-ribbon groupÕs conclusion; and (b) even US corporations let alone developing country ones would be better off not having stock market valuation as a corporate goal.

Suggested Citation

  • Ajit Singh & Jack Glen & Ann Zammitt & Rafael De Hoyos & Alaka Singh & Bruce Weisse, 2005. "Shareholder value maximisation, stock market and new technology: should the US corporate model be the universal standard," Working Papers wp315, Centre for Business Research, University of Cambridge.
    • Handle: RePEc:cbr:cbrwps:wp315
    Note: PRO-2
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    2. Jack Glen & Ajit Singh, 2005. "Corporate Governance, Competition, and Finance: Re-thinking Lessons from the Asian Crisis," Eastern Economic Journal, Eastern Economic Association, vol. 31(2), pages 219-243, Spring.
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    10. Ajit Singh, 1999. "Should Africa promote stock market capitalism?," Journal of International Development, John Wiley & Sons, Ltd., vol. 11(3), pages 343-365.
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    Cited by:

    1. Simon Deakin & Ajit Singh, 2009. "The Stock Market, the Market for Corporate Control and the Theory of the Firm: Legal and Economic Perspectives and Implications for Public Policy," Chapters, in: Per-Olof Bjuggren & Dennis C. Mueller (ed.), The Modern Firm, Corporate Governance and Investment, chapter 9, Edward Elgar Publishing.
    2. Ajit Singh & Ann Zammit, 2006. "Corporate Governance, Crony Capitalism and Economic Crises: should the US business model replace the Asian way of “doing business”?," Corporate Governance: An International Review, Wiley Blackwell, vol. 14(4), pages 220-233, July.
    3. Mazumdar, Surajit, 2008. "Crony Capitalism: Caricature or Category?," MPRA Paper 19626, University Library of Munich, Germany.
    4. Dennis C. Mueller, 2006. "The Anglo‐Saxon Approach to Corporate Governance and its Applicability to Emerging Markets," Corporate Governance: An International Review, Wiley Blackwell, vol. 14(4), pages 207-219, July.
    5. Zou, Peng & Li, Guofeng, 2016. "How emerging market investors' value competitors' customer equity: Brand crisis spillover in China," Journal of Business Research, Elsevier, vol. 69(9), pages 3765-3771.
    6. Sheng, Andrew & Singh, Ajit, 2013. "Islamic Stock Markets in a Global Context," MPRA Paper 53035, University Library of Munich, Germany.

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    More about this item

    Keywords

    Shareholder wealth; Information technology; Stock-market efficiency;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G3 - Financial Economics - - Corporate Finance and Governance

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