Activism for Profit: The Rise of Shareholder Value

The post-war economic prosperity ended in the 1970s, leading to stagflation and declining profitability for large U.S. companies. This situation fueled a movement among institutional investors, such as public pension and mutual funds, who started to challenge corporate management for better financial returns. They advocated for the principle that maximizing shareholder returns should be the primary objective of corporations. This shift in focus marked a significant rise in activist investing and emphasized the democratic nature of the shareholder value model.