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2014 | OriginalPaper | Buchkapitel

6. Maximizing the Shareholder Value

verfasst von : Robert Miller

Erschienen in: Christian Ethics and Corporate Culture

Verlag: Springer International Publishing

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Abstract

A persistent tension exists concerning the proper ends of business organizations and thus the purposes that corporate managers ought to pursue in acting on behalf of the company. On the one hand, “[a] business’ objective must be met in economic terms and according to economic criteria” (Pontifical Council for Justice and Peace, Compendium of the Social Doctrine of the Church (2004) at §338), which seems to mean that managers should maximize shareholder value. On the other hand, “[b]usiness owners and management must not limit themselves to taking into account only the economic objectives of the company [and] the criteria of economic efficiency…. It is also their precise duty to respect concretely the human dignity of those who work within the company” (Id. at §344) and, presumably, of those who are customers, vendors, creditors, and persons who live in communities in which the business operates. This seems to mean that managers should sometimes promote the interests of such persons at the expense of shareholders. The question is thus how the ends of maximizing shareholder value and benefiting other corporate constituencies interrelate, i.e., how managers ought to balance the interests of one group against those of others.

In attempting to answer this question, I begin from the working assumption that, in a good company, managers balance properly the maximization of shareholder value and the interests of other corporate constituencies. As I explain below, this assumption is actually more complex than it may seem and involves adopting a virtue-theoretic meta-ethics. I next consider, in light of the moral philosophy of St. Thomas, what precisely it means to say that a company is good, that is, that it is good qua company or a good company. With that analysis in hand, I return to the issue of how maximizing shareholder value ought be balanced against other corporate ends, and I argue that managers may pursue such ends only to the extent that actions undertaken for such ends are ultimately ordered to maximizing shareholder value. I further argue that, despite its seeming limitation on actions directed to the benefit of other corporate constituencies, this principle in fact allows wide scope for such actions. Finally, I conclude that this view establishes an intelligible relation among the various corporate ends, gives a due primacy to the end of maximizing shareholder value, and still allows managers wide latitude to treat employees and other corporate constituencies generously.

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Vorheriges Kapitel The Common Good and Social-Competitive Creativity

Nächstes Kapitel Doing Well by Doing Good: Distinguishing the Right from the Good in Theories of Corporate Social Responsibility

Pontifical Council for Justice and Peace, Compendium of the Social Doctrine of the Church (2004) at §338.

Id. at §344.

In fact, they may be able to puzzle this out in a mode of reasoning that becomes very important in virtue-theoretic systems and to which I return to below.

In practice, specifications like those in the example often include provisions that state that the material must have, e.g., density of not greater than a specified number of grams per cubic centimeter. If so, engineers reading the specifications would probably conclude that the lighter a material is, the better it is, everything else being equal. Such complications do not vitiate the main point for which I am using the example. At the very least, we can imagine that the specifications contain statements only of the form that, e.g., the density of the material ought to be within a specified range, for, from the point of view the engineers at the Department of Defense, above such range it is too heavy, increasing the overall weight of the aircraft beyond acceptable limits, and below such range it is too light, introducing changes in density between the external skeleton of the aircraft and the canopy that would create unacceptable structural stresses, etc.

See Nicomachean Ethics, especially Book I and passim.

See Groundwork for the Metaphysics of Morals, passim.

See generally, Alasdair MacIntyre, A Short History of Ethics (1966). Similarly, “Ancient and medieval ethical theory centers on the problem of how man in general is to achieve well-being. Before the Renaissance it was generally assumed that all men are by nature ordered toward the attainment of one ultimate end. In different writers this over-all goal is described diversely but the orientation of all premodern ethical thought is teleological. This means that the focal point of nearly all ethics covered in the first two parts of this history [i.e., “Part One: Greco-Roman Theories” and “Part Two: Patristic and Medieval Theories”] is the question: How may man best live and act, so that he will reach his final objective as man? On the other hand, modern and contemporary ethical theories focus on the problem of practical judgment: How can one explain and justify the ‘oughtness’ in human experience?” (Vernon J. Bourke, History of Ethics (1968) at 7–8). Also see generally, Servais Pinckaers, O.P., The Sources of Christian Ethics (trans. Sr. Mary Thomas Noble, O.P., 1995).

See generally, Ad. Tanquerey et al., Synopsis Theologiae Moralis et Pastoralis (9th ed., 1931); Antonio M. Arregui, Summarium Theologiae Moralis ad Recentem Codicem Iuris Canonici Accomodatum (1944).

“The Dignity of the Human Person” in Karol Wojtyla, Person and Community: Selected Essays (Theresa Sandok, OFM, trans., 1993) at 177, 179. John Paul’s views on this matter are difficult to characterize. Despite the strong emphasis on the final end for human beings in Veritatis Splendor, he nevertheless takes an emphatically Kantian approach in Love and Responsibility, The Theology of the Body, and Crossing the Threshold of Hope, in which last he expressly says that he himself relies on a formulation of the categorical imperative: “Love for a person excludes the possibility of treating him as an object of pleasure. This is a principle of Kantian ethics and constitutes his so-called second imperative” [Crossing the Threshold of Hope (1994) at 201 (emphasis deleted)]. Assuming, however, that what John Paul says when discussing fundamental moral theology in a magisterial mode ought be given greater weight than what he says in other contexts in non-magisterial writings, then the virtue-theoretic account in Veritatis Splendor ought to govern.

Summa Theologiae Ia.5.1–6; De Veritate xxi. See also the Expositio Sententiarum I.1; I.8.3; I.19.5 and passim, and the Expositio in X Libros Ethicorum Nicomacheorum, especially Lib. I.

Augustine and Aquinas both fully realized that this doctrine dealt only with what might be called the metaphysical problem of evil, i.e., with blocking the inference that God acts to create or conserve in being evil as a positive reality. They both fully realized that the moral problem of evil, i.e., an explanation as to how a good God permits such privations to occur, required a further treatment. In Aquinas, see Summa Theologiae Ia.19.9 and Ia.48–49; De Malo i, ii, and iii; and De Potentia i.6.

“Illud nomen vel sit synonymum enti: quod de bono dici non potest, cum non nugatorie dicatur ens bonum; vel addat aliquid ad minus secundum rationem; et sic opportet quod bonum, ex quo non contrahit ens, addat aliquid super ens, quod sit rationis tantum” (De Veritate xxi.1). See also, Summa Theologiae Ia.5.1–2.

“In quantum autem unum ens est secundum esse suum perfectivum alterius et conservativum, habet rationem finis respectu illius quod ab eo perficitur; et inde est quod omnes recte definientes bonum ponunt in ratione eius aliquid quod pertineat ad habitudinem finis” (De Veritate xxi.1). See also, Summa Theologiae Ia.5.4.

“Ratio enim boni in hoc consistit, quod aliquid sit appetibile: unde Philosophus, in I ‘Ethic.,’ dicit quod bonum est ‘quod omnia appetunt.’ Manifestum est autem quod unumquodque est appetibile secundum quod est perfectum: nam omnia appetunt suam perfectionem. Intantum est autem perfectum unumquodque, inquantum est actu: unde manifestum est quod intantum est aliquid bonum, inquantum est ens” (Summa Theologiae Ia.5.1).

Nicomachean Ethics I.1, at 1094a3.

“Cum bonum sit quod omnia appetunt, hoc autem habet rationem finis; manifestum est quod bonum rationem finis importat.” Summa Theologiae Ia.5.4.

Peter T. Geach, Good and Evil, 17 Analysis 33 (1956), reprinted in Philippa Foot, Theories of Ethics (1967) at 74.

Alasdair MacIntyre, A Short History of Ethics, 5–13, and After Virtue (1982), passim.

Geach actually says that all intelligible uses of “good” reduce to this attributive use, but I need not defend that stronger claim here. It suffices for my purposes that the attributive use of “good” is one intelligible use of the word and that the use of “good” in “good company” is attributive.

Richard Dawkins, The Blind Watchmaker (1986) at 21.

Summa Theologiae Ia-IIae.1-6.

Trustees of Dartmouth College v. Woodward, 17 U.S. 518, 636 (1819).

Rerum Novarum at no. 27.

Compendium §340.

As an empirical matter, it seems very likely that people forming or investing in companies are seeking not just the competitive return but a supercompetitive return, i.e., economic rents. Just how this relates to the end we should assign to companies is complex, but one thing is clear: this consideration strongly reinforces the conclusion that those forming or investing in companies want not just an accounting profit but the largest profit available.

Rerum Novarum at no. 6.

Compendium at §338.

See Summa Theologiae Ia-IIae.18.

The two conditions in the text make the action objectively moral. There is a third condition that must be fulfilled for the action to be subjectively moral as well, viz., the agent must choose the action as ordered to the final end and not for some other reason. Important as this condition is for judging the agent’s particular merit or demerit, it is not relevant to identifying which actions, in general, human beings ought to perform or not perform, and so is not relevant to our inquiry here.

Restatement (Second) of Agency §387.

Meinhard v. Salmon, 164 N.E. 545, 546 (New York 1928) (internal quotation marks and citation omitted).

Compendium §344.

Revlon, Inc. v. MacAndrews & Forbes Holdings, 506 A.2d 173, 182 (1986). See also Unocal Corporation v. Mesa Petroleum Co., 493 A.2d 946, 955 (1985).

The corporation laws of most states grant power to corporations to make such donations, e.g., 8 Del. C. § 122(9) (2006), but the issue, from both a legal and moral point of view, is when this power may rightfully be exercised.

98 A.2d 581 (NJ 1953), appeal dismissed, 346 U.S. 861 (1953).

Id. at 583.

Titel: Maximizing the Shareholder Value
verfasst von: Robert Miller
Verlag: Springer International Publishing
Buch: Christian Ethics and Corporate Culture
Print ISBN: 978-3-319-00938-4

Electronic ISBN: 978-3-319-00939-1

Copyright-Jahr: 2014
DOI: https://doi.org/10.1007/978-3-319-00939-1_6

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