The long-accepted corporate goal of maximizing shareholder value got a real slap-down when corporate icon Jack Welch recently told a reporter: “Shareholder value is the dumbest idea in the world.” What made the comment astonishing was that Welch was a proponent of shareholder value for more than 25 years, during which time General Electric exceeded analysts’ consensus estimates every quarter for longer than a decade.
Welch, the famed former GE chief executive, is not alone in questioning the consequences of corporations focusing on maximizing shareholder value. The concept has taken on meanings that go well beyond its definition (the value of ...