IDEAS home Printed from
   My bibliography  Save this paper

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


  • William LAZONICK

    (University of Massachusetts Lowell)


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.

Suggested Citation

  • William LAZONICK, 2008. "The Quest for Shareholder Value : Stock Repurchases in the US Economy," Discussion Papers (REL - Recherches Economiques de Louvain) 2008043, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  • Handle: RePEc:ctl:louvre:2008043

    Download full text from publisher

    File URL:
    Download Restriction: no


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Corinne Perraudin & Héloïse Petit, & Antoine Rebérioux, 2013. "Worker Information and Firm Disclosure Analysis on French Linked Employer–Employee Data," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 52(1), pages 134-161, January.
    2. repec:eee:crpeac:v:21:y:2010:i:7:p:642-645 is not listed on IDEAS
    3. Driver, Ciaran & Guedes, Maria João Coelho, 2012. "Research and development, cash flow, agency and governance: UK large companies," Research Policy, Elsevier, vol. 41(9), pages 1565-1577.
    4. repec:eee:tefoso:v:129:y:2018:i:c:p:261-274 is not listed on IDEAS
    5. repec:eee:crpeac:v:25:y:2014:i:1:p:67-77 is not listed on IDEAS
    6. Christian Weller & Luke Reidenbach, 2011. "On Uneven Ground," Challenge, Taylor & Francis Journals, vol. 54(3), pages 5-37.
    7. repec:eee:accfor:v:37:y:2013:i:4:p:268-279 is not listed on IDEAS
    8. repec:eee:crpeac:v:21:y:2010:i:7:p:631-641 is not listed on IDEAS
    9. repec:eee:accfor:v:34:y:2010:i:3:p:211-221 is not listed on IDEAS

    More about this item


    Stock market; Innovative enterprise; shareholder value; stock repurchases;

    JEL classification:

    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. 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). General contact details of provider: .

    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.

    We have no references for this item. You can help adding them by using 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.