All Else Equal: Making Better Decisions

Rerun: Ep15 "Shareholder vs. Stakeholder Capitalism" with Alex Edmans

17 snips
Jan 3, 2024
Delve into the debate of prioritizing shareholder value vs. broader stakeholder interests. Explore government intervention, societal impact, and CEO compensation. Learn how corporations can leverage their strengths for the greater good.
Ask episode
AI Snips
Chapters
Transcript
Episode notes
INSIGHT

Shareholder Capitalism Is Long-Term

  • Shareholder capitalism focuses on maximizing firm value to shareholders, emphasizing long-term value rather than just short-term profits.
  • Investor holding periods don't change that stock prices reflect the present value of all future profits, aligning shareholder capitalism with long-term value creation.
INSIGHT

Vague Stakeholder Definitions

  • Stakeholder capitalism includes employees, customers, suppliers, neighbors, and society broadly as interests of the firm.
  • The definition of stakeholders is vague, making their equal representation in decisions unclear and complex.
ANECDOTE

Fishing Example Shows Externalities

  • A fishing firm owned by local shareholders overfishes a lake, reducing birds, a negative externality harming non-shareholders.
  • This illustrates the conflict between profit-maximizing shareholders and stakeholders affected by externalities.
Get the Snipd Podcast app to discover more snips from this episode
Get the app