Good Company: Economic Policy after Shareholder Primacy

Good Company: Economic Policy after Shareholder Primacy

On the faulty intellectual origins of shareholder primacy—and how policy can win back what’s been lost. In an era of shareholder primacy, share price is king. Businesses operate with short-term goals to deliver profits to shareholders, enjoying stability (and bonuses) in the process. While the public bemoans the doctrine for its insularity and wealth-consolidating effects, its influence over corporate governance persists. Good Company offers an exacting argument for why shareholder primacy was never the right model to follow for truly understanding how corporations operate. Lenore Palladino shows that corporations draw power from public charters—agreements that allow corporations to enjoy all manner of operational benefits. In return, companies are meant to innovate for the betterment of the societies that support them. However, that debt—increasingly wielded for stock buybacks and shareholder bonuses—is not being repaid. Palladino theorizes a modern corporation that plays its intended role while delivering social and economic good in the process and offers tangible policy solutions to make this a reality. Good Company is both an expert introduction to the political economy of the firm—as it was, as it is, as it can be—and a calibrating examination of how public policy can shape companies, and societies, for the better. "Palladino explores how ending shareholder primacy and reorienting corporate decision-making toward productivity would work in practice, focusing on how board members, employees, managers, shareholders, customers, and the broader public would understand their rights and responsibilities if they were operating together in pursuit of economic innovation." ― Journal of Economic Literature “Palladino has written a tour-de-force on the history, politics, and policy of corporations and capitalism. Palladino shows that we can have a more innovative, dynamic economy. Too many companies have become financialized engines in thrall to shareholders. Palladino's book is a roadmap towards companies that produce real, useful goods and services for all of us, as stakeholders." -- Felicia Wong | Roosevelt Institute “For two generations, the idea that corporations exist to create shareholder value has been the North Star for American business. As Good Company posits, this has created disastrous consequences: increased inequality, concentrated economic power, lower resiliency, and a hollowing of innovative enterprise. Palladino proposes tested policies—such as federal incorporation or increased worker ownership and representation on corporate boards—that can restore the public corporation as an engine of opportunity and innovation.” -- Jerry Davis | University of Michigan, Ann Arbor “ Good Company  offers new ways of thinking about corporations, the core of capitalism. The book is a head-on challenge to the myth that what’s best for corporate shareholders is best for the rest of us and even for companies. Palladino considers public policies to make companies more innovative and equitable, including changes in tax law, fiduciary rules, corporate boards, and the process for distributing corporate wealth.  Good Company  is incisive and much needed.” -- Sanford M. Jacoby | University of California, Los Angeles Lenore Palladino is assistant professor of economics and public policy at the University of Massachusetts, Amherst, a senior fellow of the Roosevelt Institute, and research associate at the Political Economy Research Institute .