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The Embedded Firm: Corporate Governance, Labor, and Finance Capitalism – Commentary

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  • Mocsary George A.

    (Assistant Professor of Law, Southern Illinois University School of Law, Carbondale, IL 62901)

Abstract

Enlightened shareholder wealth maximization – long-term thinking about improving and perfecting the corporation’s products and services that translates into sustainably increased future cash flows – has almost entirely given way to an overzealous focus on short-term stock performance. This commentary synthesizes a few basic concepts before this backdrop: (1) Any theory that suggests the solution rather than a solution is bound to fail because people will learn to game it. It is more appropriate to have a number of theories – including shareholder wealth maximization – to take from the shelf and apply as needed. (2) All major corporate stakeholders exercise their often significant power over corporate affairs to their financial benefit. (3) Shareholders are not always the residual claimants of a corporation’s assets because, for example, of bankruptcy or regulation.

Suggested Citation

  • Mocsary George A., 2014. "The Embedded Firm: Corporate Governance, Labor, and Finance Capitalism – Commentary," Accounting, Economics, and Law: A Convivium, De Gruyter, vol. 4(2), pages 123-136, July.
    • Handle: RePEc:bpj:aelcon:v:4:y:2014:i:2:p:14:n:2
    DOI: 10.1515/ael-2013-0035
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    References listed on IDEAS

    as
    1. Olivier Weinstein, 2013. "The Shareholder Model of the Corporation, Between Mythology and Reality," Post-Print hal-01361219, HAL.
    2. Yuri Biondi & Arnaldo Canziani & Thierry Kirat, 2007. "The Firm as an Entity: Implications for Economics, Accounting, and the Law," Post-Print halshs-00203355, HAL.
    3. Strasser Kurt A. & Blumberg Phillip, 2011. "Legal Form and Economic Substance of Enterprise Groups: Implications for Legal Policy," Accounting, Economics, and Law: A Convivium, De Gruyter, vol. 1(1), pages 1-30, January.
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