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The value-extracting CEO: How executive stock-based pay undermines investment in productive capabilities

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  • Lazonick, William

Abstract

•Senior corporate executives allocate corporate resources to investments in productive capabilities.•Economic analysis must comprehend how the system of executive pay influences decisions to allocate corporate resources.•U.S. stock-based pay incentivizes top corporate executives to make allocation decisions to boost the company’s stock price.•This stock-based pay rewards executive decisions that increase the company’s stock price by speculation and manipulation.•The Theory of Innovative Enterprise debunks the ideology that companies should be run to “maximize shareholder value.”

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  • Lazonick, William, 2019. "The value-extracting CEO: How executive stock-based pay undermines investment in productive capabilities," Structural Change and Economic Dynamics, Elsevier, vol. 48(C), pages 53-68.
    • Handle: RePEc:eee:streco:v:48:y:2019:i:c:p:53-68
    DOI: 10.1016/j.strueco.2017.11.006
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    Cited by:

    1. Mingyuan Guo & Shuyu Shen, 2019. "Managerial Shareholding and CSR: Does Internal Control Quality Matter?—Evidence from China," Sustainability, MDPI, vol. 11(15), pages 1-21, August.

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