IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

The Quest for Shareholder Value : Stock Repurchases in the US Economy

Listed author(s):
  • William LAZONICK

    (University of Massachusetts Lowell)

Registered author(s):

    During the 1980s and 1990s the argument that “maximizing share-holder value” results in superior economic performance came to dominate the corporate governance debates. In this paper, I outline the rationale for the shareholder-value perspectives, and show that, rooted in agency theory,it lacks a theory of innovative entreprise. Hence it cannot be used to analyze the conditions under which the stock market supports or undermines the process of value creation. To go beyond agency theory and its shareholder-value perspective, I present a framework for analyzing the functions of the stock market in the business corporation and the influence of these functionson the social conditions of innovative enterprise. I then use this framework to explain why in the United States since 1990s there has been a widespread trend in corporate stock repurchases, including a sharp acceleration in buybacks since 2003. Focusing on a list of the largest corporate repurchasers in the United States, I raise questions concerning the relation as a whole. I conclude with a discussion of why companies do stock repurchases, and in particular whether they can be justified as a contribution to innovative enterprise. I argue that the ultimate justification for stock repurchases is the ideology of “maximizing shareholder value” - an ideology that works to the direct benefit of corporate executives who make corporate ressource allocation decisions and who derive high levels of renumeration from munificient stock option awards.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL:
    Download Restriction: no

    Paper provided by Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) in its series Discussion Papers (REL - Recherches Economiques de Louvain) with number 2008043.

    in new window

    Length: 61
    Date of creation: 01 Dec 2008
    Handle: RePEc:ctl:louvre:2008043
    Contact details of provider: Postal:
    Place Montesquieu 3, 1348 Louvain-la-Neuve (Belgium)

    Fax: +32 10473945
    Web page:

    More information through EDIRC

    No references listed on IDEAS
    You can help add them by filling out this form.

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:ctl:louvre:2008043. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sebastien SCHILLINGS)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.