Predatory Value Extraction: How the Looting of the Business Corporation Became the US Norm and How Sustainable Prosperity Can Be Restored
William Lazonick and Jang-Sup Shin
Abstract
This book explains how an ideology of corporate resource allocation known as “maximizing shareholder value” (MSV), that emerged in the 1980s and came to dominate strategic thinking in business schools and corporate boardrooms, undermined the social foundations of sustainable prosperity, resulting in employment instability, income inequity, and slow productivity growth. In explaining what happened to sustainable prosperity in the United States, it focuses on the growing imbalance between value creation and value extraction that reached to the extent of “predatory value extraction.” Based on “Th ... More
This book explains how an ideology of corporate resource allocation known as “maximizing shareholder value” (MSV), that emerged in the 1980s and came to dominate strategic thinking in business schools and corporate boardrooms, undermined the social foundations of sustainable prosperity, resulting in employment instability, income inequity, and slow productivity growth. In explaining what happened to sustainable prosperity in the United States, it focuses on the growing imbalance between value creation and value extraction that reached to the extent of “predatory value extraction.” Based on “The Theory of Innovative Enterprise,” the book analyzes the value extracting mechanism by “value-extracting insiders,” i.e. corporate executives, “value-extracting enablers,” i.e. institutional investors, and “value-extracting outsiders,” i.e. hedge-fund activists. It concludes with policy suggestions to rebuild the U.S. corporate-governance regime for combating predatory value extraction and restoring sustainable prosperity.
Keywords:
Predatory value extraction,
sustainable prosperity,
corporate governance,
innovative enterprise,
executive pay,
institutional investors,
hedge-fund activism,
maximizing shareholder value,
MSV,
employment instability,
income inequality
Bibliographic Information
| Print publication date: 2019 |
Print ISBN-13: 9780198846772 |
| Published to Oxford Scholarship Online: January 2020 |
DOI:10.1093/oso/9780198846772.001.0001 |
Authors
Affiliations are at time of print publication.
William Lazonick, author
Professor of Economics, University of Massachusetts Lowell
Jang-Sup Shin, author
Associate Professor of Economics, National University of Singapore
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