Such views echo free-market economist Milton Friedman, who emphasized nearly half a century ago that a business has only one responsibility, to maximize shareholder value. No less than shareholders then, such workers become residual claimants on the firm’s value. Such a commitment will make employees more willing to put out for the firm, and thus also enhances shareholder value. But job cuts that boost shareholder value aren’t warranted if they reduce the value of other core stakeholders more. Some critics worry that if boards start focusing on goals other than maximizing shareholder value, it will be hard to monitor and control their performance.

Source: Mint May 01, 2019 19:52 UTC