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Audio Interview

What should shareholders decide and how should their decisions be made?

Published on August 14, 2018   24 min

Other Talks in the Playlist: Interviews with business leaders and scholars

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Interviewer: Professor Hart, thank you very much for sparing the time today. We're going to be discussing your paper with Luigi Zingales, called: Companies Should Maximize Shareholder Welfare, not Market Value. This was published in the Journal of Law, Finance, and Accounting, 2017, issue 2, pages 247 to 274. The reason I say that is that we don't want to make things easy for the listener to this interview by not having them read the paper. We are going to assume that they've read the paper beforehand because I think there's a significant problem with relevant work such as this, where people look at the title, perhaps read the abstract, then discuss the matter and forget that they never read the paper and the arguments that were in there. So providing you don't want to ask for the opportunity to summarize the paper, we can move on to the discussion, assuming that our listeners have read the paper. Is that fine with you? Prof. Hart: That's fine. Interviewer: Is there any reason why we should treat the goals of companies any differently from the way we would treat the goals of other legal persons in society, i.e., individuals? Prof. Hart: I think not, I mean, that's the conclusion I've come to. I didn't always quite see it that way, but I think that companies are not independent objects, they have people in them, working, and they are also owned by people, so we shouldn't think of them as different.
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What should shareholders decide and how should their decisions be made?

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