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Encyclopedia of Sustainable Management pp 1–7Cite as

Shareholder Theory/Shareholder Value

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Synonyms

Shareholder primacy theory; Shareholder value creation; Shareholder value maximization; Shareholder wealth maximization; Shareholder-centric approach

Definition/Description

Shareholder theory states that the primary objective of management is to maximize shareholder value. This objective ranks in front of the interests of other corporate stakeholders, such as employees, suppliers, customers, and society. Shareholder theory argues that shareholders are the ultimate owners of a corporate’s assets, and thus, the priority for managers and boards is to protect and grow these assets for the benefit of shareholders. Shareholder theory assumes that shareholders value corporate assets with two measurable metrics, dividends and share price. Therefore, management should make decisions that maximize the combined value of dividends and share price increases. However, shareholder theory fails to consider that shareholders and corporates may have other objectives that are not based on...

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Author information

Authors and Affiliations

  1. Technological University Dublin, Dublin, Ireland

    Maeve O’Connell

  2. Ulster Business School, Ulster University, Newtownabbey, Northern Ireland

    Anne Marie Ward

Authors
  1. Maeve O’Connell
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  2. Anne Marie Ward
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Corresponding author

Correspondence to Anne Marie Ward .

Editor information

Editors and Affiliations

  1. London Metropolitan University, Guildhall Faculty of Business and Law London Metropolitan University, London, UK

    Samuel Idowu

  2. Cologne Business School, Ingolstadt, Germany

    René Schmidpeter

  3. College of Business, Loyola University New Orleans, New Orleans, LA, USA

    Nicholas Capaldi

  4. International Training Centre of the IL, International Labor Organization, Turin, Italy

    Liangrong Zu

  5. Department of Economics, Society and Politics, University of Urbino Carlo Bo, Urbino, Italy

    Mara Del Baldo

  6. Instituto Politécnico da Guarda, Guarda, Portugal

    Rute Abreu

Section Editor information

  1. Unitelma Sapienza University, Rome, Italy

    Carmela Gulluscio

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O’Connell, M., Ward, A.M. (2020). Shareholder Theory/Shareholder Value. In: Idowu, S., Schmidpeter, R., Capaldi, N., Zu, L., Del Baldo, M., Abreu, R. (eds) Encyclopedia of Sustainable Management. Springer, Cham. https://doi.org/10.1007/978-3-030-02006-4_49-1

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  • DOI: https://doi.org/10.1007/978-3-030-02006-4_49-1

  • Received:

  • Accepted:

  • Published:

  • Publisher Name: Springer, Cham

  • Print ISBN: 978-3-030-02006-4

  • Online ISBN: 978-3-030-02006-4

  • eBook Packages: Springer Reference Business and ManagementReference Module Humanities and Social SciencesReference Module Business, Economics and Social Sciences

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