Why Lynn Stout Took Up the Sword Against Share Value Maximization.

Table of Contents 1 How Financial Markets Actually Work 2 How Humans Actually Behave 3 A New Theory of Firm 4 Recurring Themes 5 The Many Issues with Shareholder Primacy 6 Model Specifications 7 Externalization Machine 8 Compounding Effects of Financialization 9 A Final Challenge to Shareholder Primacy Advocates 10 In Memoriam References The Corporate Issue: A Tribute to Lynn Stout1. But, knowing the firm can be sold out from under them, other participants in the firm, such as employees, will resist investing in firm-specific knowledge and skills since they would lose their firm-specific investments in case of the firm sale. Lynn and I also appreciated right away that this was a new "theory of the firm", which emphasizes the lateral interactions and firm-specific investments among employees as sources of value, rather than top-down control, and de-emphasizes the "agency cost" problem between directors and shareholders that so dominates corporate law scholarship. If the firm doesn't pay for using up some of "nature's CO SB 2 sb absorption capacity" the implicit cost is imposed on the community of interests that make up the firm, or completely externalized onto parties who have no other connection to the firm at all. [Extracted from the article]