Question A:
Having companies run to maximize shareholder value creates significant negative externalities for workers and communities.
Responses
Responses weighted by each expert's confidence
Question B:
Appropriately managed corporations could create significantly greater value than they currently do for a range of stakeholders – including workers, suppliers, customers and community members – with small impacts on shareholder value.
Responses
Responses weighted by each expert's confidence
Question C:
Effective mechanisms for boards of directors to ensure that CEOs act in ways that balance the interests of all stakeholders would be straightforward to introduce.
Responses
Responses weighted by each expert's confidence
Question A Participant Responses
| Participant | University | Vote | Confidence | Bio/Vote History |
|---|---|---|---|---|
 Franklin Allen |
Imperial College London | Bio/Vote History | ||
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I think the issue of stakeholder governance is a very important and much understudied subject. It has been difficult to publish papers.
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 Pol Antras |
Harvard | Bio/Vote History | ||
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 Timothy J. Besley |
LSE | Bio/Vote History | ||
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 Olivier Blanchard |
Peterson Institute | Bio/Vote History | ||
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Not necessarily. Depends on distortions in the market and in the economy as a whole.
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 Nicholas Bloom |
Stanford | Bio/Vote History | ||
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 Richard William Blundell |
University College London | Did Not Answer | Bio/Vote History | |
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 Agnès Bénassy-Quéré |
Paris School of Economics | Bio/Vote History | ||
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Depends on the horizon of the shareholders and on the regulation.
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 Elena Carletti |
Bocconi | Bio/Vote History | ||
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 Jean-Pierre Danthine |
Paris School of Economics | Bio/Vote History | ||
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 Paul De Grauwe |
LSE | Did Not Answer | Bio/Vote History | |
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 Jan Eeckhout |
UPF Barcelona | Bio/Vote History | ||
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2 caveats: 1 if there are inefficiencies at firm level (market power in output or input); 2 channel may be indirect via equil wages
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 Ernst Fehr |
Universität Zurich | Bio/Vote History | ||
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 Xavier Freixas |
Barcelona GSE | Did Not Answer | Bio/Vote History | |
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 Nicola Fuchs-Schündeln |
Goethe-Universität Frankfurt | Did Not Answer | Bio/Vote History | |
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 Jordi Galí |
Barcelona GSE | Bio/Vote History | ||
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 Francesco Giavazzi |
Bocconi | Bio/Vote History | ||
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 Rachel Griffith |
University of Manchester | Bio/Vote History | ||
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Pollution the most obvious, but also other social costs.
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 Veronica Guerrieri |
Chicago Booth | Bio/Vote History | ||
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 Luigi Guiso |
Einaudi Institute for Economics and Finance | Bio/Vote History | ||
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 Patrick Honohan |
Trinity College Dublin | Bio/Vote History | ||
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Sometimes does, sometimes not. When it does, law and regulation can/should be used to counteract.
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 Beata Javorcik |
University of Oxford | Bio/Vote History | ||
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 Henrik Kleven |
Princeton | Did Not Answer | Bio/Vote History | |
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 Jan Pieter Krahnen |
Goethe University Frankfurt | Bio/Vote History | ||
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There is a route to maximizing shareholder value while simultaneously upholding stakeholder utility: That is German Ordnungspolitik.
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 Botond Kőszegi |
Central European University | Bio/Vote History | ||
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 Eliana La Ferrara |
Harvard Kennedy | Did Not Answer | Bio/Vote History | |
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 Christian Leuz |
Chicago Booth | Bio/Vote History | ||
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Co should max sh welfare not value. Even Milton F recognized these externalities, need laws & ethics as constraints & perhaps stronger ones.
-see background information here -see background information here |
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 Thierry Mayer |
Sciences-Po | Did Not Answer | Bio/Vote History | |
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 Costas Meghir |
Yale | Bio/Vote History | ||
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 Peter Neary |
Oxford | Bio/Vote History | ||
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I agree with this statement, though maximizing shareholder value also encourages efficient profit-making which has social value
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 Kevin O'Rourke |
Oxford | Bio/Vote History | ||
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 Marco Pagano |
Università di Napoli Federico II | Bio/Vote History | ||
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 Lubos Pastor |
Chicago Booth | Bio/Vote History | ||
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True but it creates not only negative but also positive externalities. The net effect varies across firms.
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 Torsten Persson |
Stockholm University | Bio/Vote History | ||
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 Christopher Pissarides |
London School of Economics and Political Science | Bio/Vote History | ||
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 Richard Portes |
London Business School | Bio/Vote History | ||
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 Canice Prendergast |
Chicago Booth | Bio/Vote History | ||
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 Lucrezia Reichlin |
London Business School | Did Not Answer | Bio/Vote History | |
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 Rafael Repullo |
CEMFI | Bio/Vote History | ||
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 Hélène Rey |
London Business School | Bio/Vote History | ||
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For example carbon is not properly priced.
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 Antoinette Schoar |
MIT | Bio/Vote History | ||
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 Daniel Sturm |
London School of Economics | Bio/Vote History | ||
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 John Van Reenen |
LSE | Bio/Vote History | ||
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 John Vickers |
Oxford | Bio/Vote History | ||
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Uncertain because much depends on surrounding public policies towards such externalities.
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 Hans-Joachim Voth |
University of Zurich | Bio/Vote History | ||
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 Beatrice Weder di Mauro |
The Graduate Institute, Geneva | Did Not Answer | Bio/Vote History | |
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 Karl Whelan |
University College Dublin | Bio/Vote History | ||
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This could be the case (e.g. if profit maximizing involved polluting the environment) but these cases are best dealt with via regulation.
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 Charles Wyplosz |
The Graduate Institute Geneva | Bio/Vote History | ||
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 Fabrizio Zilibotti |
Yale University | Did Not Answer | Bio/Vote History | |
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Question B Participant Responses
| Participant | University | Vote | Confidence | Bio/Vote History |
|---|---|---|---|---|
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Franklin Allen |
Imperial College London | Bio/Vote History | ||
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Again very understudied.
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Pol Antras |
Harvard | Bio/Vote History | ||
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Timothy J. Besley |
LSE | Bio/Vote History | ||
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Olivier Blanchard |
Peterson Institute | Bio/Vote History | ||
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there are probably such cases. In general, it is primarily the job of the government to put in place the right regulations.
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Nicholas Bloom |
Stanford | Bio/Vote History | ||
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Richard William Blundell |
University College London | Did Not Answer | Bio/Vote History | |
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Agnès Bénassy-Quéré |
Paris School of Economics | Bio/Vote History | ||
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Probably not at short horizon. More uncertain at longer horizons.
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Elena Carletti |
Bocconi | Bio/Vote History | ||
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Jean-Pierre Danthine |
Paris School of Economics | Bio/Vote History | ||
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Provided a long run perspective is adopted
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Paul De Grauwe |
LSE | Did Not Answer | Bio/Vote History | |
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Jan Eeckhout |
UPF Barcelona | Bio/Vote History | ||
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Ernst Fehr |
Universität Zurich | Bio/Vote History | ||
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Xavier Freixas |
Barcelona GSE | Did Not Answer | Bio/Vote History | |
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Nicola Fuchs-Schündeln |
Goethe-Universität Frankfurt | Did Not Answer | Bio/Vote History | |
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Jordi Galí |
Barcelona GSE | Bio/Vote History | ||
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Francesco Giavazzi |
Bocconi | Bio/Vote History | ||
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Rachel Griffith |
University of Manchester | Bio/Vote History | ||
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Veronica Guerrieri |
Chicago Booth | Bio/Vote History | ||
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Luigi Guiso |
Einaudi Institute for Economics and Finance | Bio/Vote History | ||
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Patrick Honohan |
Trinity College Dublin | Bio/Vote History | ||
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Short-termism and weak ethical principles likely limit the social contribution of many corporations, especially in complex market segments.
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Beata Javorcik |
University of Oxford | Bio/Vote History | ||
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Henrik Kleven |
Princeton | Did Not Answer | Bio/Vote History | |
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Jan Pieter Krahnen |
Goethe University Frankfurt | Bio/Vote History | ||
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In its generality, the statement is hard to disagree with...
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Botond Kőszegi |
Central European University | Bio/Vote History | ||
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Eliana La Ferrara |
Harvard Kennedy | Did Not Answer | Bio/Vote History | |
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Christian Leuz |
Chicago Booth | Bio/Vote History | ||
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Unlikely as implies corp leave lots money on table or managers extract huge rents; yet maximizing stakeh. welfare could address externalit.
-see background information here -see background information here |
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Thierry Mayer |
Sciences-Po | Did Not Answer | Bio/Vote History | |
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Costas Meghir |
Yale | Bio/Vote History | ||
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Peter Neary |
Oxford | Bio/Vote History | ||
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Modern corporations should be regulated, including anti-trust, regulation to ensure compliance with environmental and labor standards, etc.
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Kevin O'Rourke |
Oxford | Bio/Vote History | ||
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Marco Pagano |
Università di Napoli Federico II | Bio/Vote History | ||
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Lubos Pastor |
Chicago Booth | Bio/Vote History | ||
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Possible for some firms, but unlikely for most.
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Torsten Persson |
Stockholm University | Bio/Vote History | ||
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Christopher Pissarides |
London School of Economics and Political Science | Bio/Vote History | ||
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Richard Portes |
London Business School | Bio/Vote History | ||
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Canice Prendergast |
Chicago Booth | Bio/Vote History | ||
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Lucrezia Reichlin |
London Business School | Did Not Answer | Bio/Vote History | |
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Rafael Repullo |
CEMFI | Bio/Vote History | ||
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Hélène Rey |
London Business School | Bio/Vote History | ||
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Some cost cutting decisions are often very short term and destroy value in the long run. Example: fraud (diesel emissions scandal)
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Antoinette Schoar |
MIT | Bio/Vote History | ||
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Daniel Sturm |
London School of Economics | Bio/Vote History | ||
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John Van Reenen |
LSE | Bio/Vote History | ||
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John Vickers |
Oxford | Bio/Vote History | ||
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Hans-Joachim Voth |
University of Zurich | Bio/Vote History | ||
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Beatrice Weder di Mauro |
The Graduate Institute, Geneva | Did Not Answer | Bio/Vote History | |
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Karl Whelan |
University College Dublin | Bio/Vote History | ||
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I'm not sure there is sufficient empirical evidence to back up this statement.
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Charles Wyplosz |
The Graduate Institute Geneva | Bio/Vote History | ||
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Fabrizio Zilibotti |
Yale University | Did Not Answer | Bio/Vote History | |
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Question C Participant Responses
| Participant | University | Vote | Confidence | Bio/Vote History |
|---|---|---|---|---|
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Franklin Allen |
Imperial College London | Bio/Vote History | ||
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I think it will be very difficult to do in practice. The German system of codetermination may be better.
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Pol Antras |
Harvard | Bio/Vote History | ||
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Timothy J. Besley |
LSE | Bio/Vote History | ||
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Olivier Blanchard |
Peterson Institute | Bio/Vote History | ||
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I believe in more representation of workers on the board, primarily for information and trust reasons.
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Nicholas Bloom |
Stanford | Bio/Vote History | ||
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Richard William Blundell |
University College London | Did Not Answer | Bio/Vote History | |
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Agnès Bénassy-Quéré |
Paris School of Economics | Bio/Vote History | ||
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Elena Carletti |
Bocconi | Bio/Vote History | ||
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Introducing such mechanisms would not be straightforward, but something can be done
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Jean-Pierre Danthine |
Paris School of Economics | Bio/Vote History | ||
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Regulation and legal mechanisms must be complemented by changes in investors’ convictions!
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Paul De Grauwe |
LSE | Did Not Answer | Bio/Vote History | |
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Jan Eeckhout |
UPF Barcelona | Bio/Vote History | ||
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Ernst Fehr |
Universität Zurich | Bio/Vote History | ||
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Xavier Freixas |
Barcelona GSE | Did Not Answer | Bio/Vote History | |
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Nicola Fuchs-Schündeln |
Goethe-Universität Frankfurt | Did Not Answer | Bio/Vote History | |
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Jordi Galí |
Barcelona GSE | Bio/Vote History | ||
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Francesco Giavazzi |
Bocconi | Bio/Vote History | ||
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Rachel Griffith |
University of Manchester | Bio/Vote History | ||
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Veronica Guerrieri |
Chicago Booth | Bio/Vote History | ||
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Luigi Guiso |
Einaudi Institute for Economics and Finance | Bio/Vote History | ||
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Patrick Honohan |
Trinity College Dublin | Bio/Vote History | ||
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Not even sure current systems guarantee maximum shareholder value
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Beata Javorcik |
University of Oxford | Bio/Vote History | ||
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Henrik Kleven |
Princeton | Did Not Answer | Bio/Vote History | |
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Jan Pieter Krahnen |
Goethe University Frankfurt | Bio/Vote History | ||
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Long term profitability will not be maximized when other stakeholders' interests are manifestly violated.
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Botond Kőszegi |
Central European University | Bio/Vote History | ||
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Eliana La Ferrara |
Harvard Kennedy | Did Not Answer | Bio/Vote History | |
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Christian Leuz |
Chicago Booth | Bio/Vote History | ||
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It would clearly be difficult but this does not imply that one should not try. There are many difficult governance problems.
-see background information here |
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Thierry Mayer |
Sciences-Po | Did Not Answer | Bio/Vote History | |
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Costas Meghir |
Yale | Bio/Vote History | ||
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Peter Neary |
Oxford | Bio/Vote History | ||
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Regulation is a multi-faceted goal; legistating on the composion of boards of directors may not be a good instrument to achieve it
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Kevin O'Rourke |
Oxford | Bio/Vote History | ||
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Marco Pagano |
Università di Napoli Federico II | Bio/Vote History | ||
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Lubos Pastor |
Chicago Booth | Bio/Vote History | ||
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Torsten Persson |
Stockholm University | Bio/Vote History | ||
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Christopher Pissarides |
London School of Economics and Political Science | Bio/Vote History | ||
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Richard Portes |
London Business School | Bio/Vote History | ||
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Canice Prendergast |
Chicago Booth | Bio/Vote History | ||
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Lucrezia Reichlin |
London Business School | Did Not Answer | Bio/Vote History | |
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Rafael Repullo |
CEMFI | Bio/Vote History | ||
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Hélène Rey |
London Business School | Bio/Vote History | ||
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Needs a lot of information and to design proper incentive mechanisms
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Antoinette Schoar |
MIT | Bio/Vote History | ||
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Daniel Sturm |
London School of Economics | Bio/Vote History | ||
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John Van Reenen |
LSE | Bio/Vote History | ||
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John Vickers |
Oxford | Bio/Vote History | ||
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Hans-Joachim Voth |
University of Zurich | Bio/Vote History | ||
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Beatrice Weder di Mauro |
The Graduate Institute, Geneva | Did Not Answer | Bio/Vote History | |
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Karl Whelan |
University College Dublin | Bio/Vote History | ||
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Why would this be easy? It's a really complex issue.
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Charles Wyplosz |
The Graduate Institute Geneva | Bio/Vote History | ||
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Fabrizio Zilibotti |
Yale University | Did Not Answer | Bio/Vote History | |
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