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

Listed author(s):
  • Ajit Singh
  • Jack Glen
  • Ann Zammitt
  • Rafael De Hoyos
  • Alaka Singh
  • Bruce Weisse

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.

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File URL: http://www.cbr.cam.ac.uk/fileadmin/user_upload/centre-for-business-research/downloads/working-papers/wp315.pdf
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Paper provided by Centre for Business Research, University of Cambridge in its series Working Papers with number wp315.

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Date of creation: Sep 2005
Handle: RePEc:cbr:cbrwps:wp315
Note: PRO-2
Contact details of provider: Web page: http://www.cbr.cam.ac.uk

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  1. Ajit Singh, 1999. "Should Africa promote stock market capitalism?," Journal of International Development, John Wiley & Sons, Ltd., vol. 11(3), pages 343-365.
  2. Black, Bernard S. & Gilson, Ronald J., 1998. "Venture capital and the structure of capital markets: banks versus stock markets," Journal of Financial Economics, Elsevier, vol. 47(3), pages 243-277, March.
  3. 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.
  4. Gunther Tichy, 2001. "What Do We Know about Success and Failure of Mergers?," Journal of Industry, Competition and Trade, Springer, vol. 1(4), pages 347-394, December.
  5. Franklin Allen, "undated". "Stock Markets and Resource Allocation (Reprint 036)," Rodney L. White Center for Financial Research Working Papers 15-92, Wharton School Rodney L. White Center for Financial Research.
  6. Camerer, Colin, 1989. " Bubbles and Fads in Asset Prices," Journal of Economic Surveys, Wiley Blackwell, vol. 3(1), pages 3-41.
  7. Fred Kaen, 2002. "Corporate governance and shareholder value : how did we get here and where are we going?," CESifo Forum, Ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 3(3), pages 7-12, October.
  8. Franklin Allen, 2004. "Financial Systems in Europe, the USA, and ASIA," Oxford Review of Economic Policy, Oxford University Press, vol. 20(4), pages 490-508, Winter.
  9. Singh, A., 1991. "Corporate Takeovers: A Review," Cambridge Working Papers in Economics 9206, Faculty of Economics, University of Cambridge.
  10. Lawrence H. Summers, 2000. "International Financial Crises: Causes, Prevention, and Cures," American Economic Review, American Economic Association, vol. 90(2), pages 1-16, May.
  11. Robert J. Gordon, 2000. "Does the "New Economy" Measure Up to the Great Inventions of the Past?," Journal of Economic Perspectives, American Economic Association, vol. 14(4), pages 49-74, Fall.
  12. Shleifer, Andrei, 2000. "Inefficient Markets: An Introduction to Behavioral Finance," OUP Catalogue, Oxford University Press, number 9780198292272.
  13. Singh, A., 1997. "Liberalisation, the Stock Market and the Market for Corporate Control: A Bridge Too Far for the Indian Economy?," Accounting and Finance Discussion Papers 97-af35, Faculty of Economics, University of Cambridge.
  14. Klaus Gugler & Dennis C. Mueller & B. Burcin Yurtoglu, 2004. "Corporate Governance and Globalization," Oxford Review of Economic Policy, Oxford University Press, vol. 20(1), pages 129-156, Spring.
  15. Ajit Singh, 1998. "Financial liberalisation, stockmarkets and economic development," Nova Economia, Economics Department, Universidade Federal de Minas Gerais (Brazil), vol. 8(1), pages 165-182.
  16. Singh, Ajit & Singh, Alaka & Wiesse, Bruce, 2000. "Information technology, venture capital and the stock market," MPRA Paper 53718, University Library of Munich, Germany.
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