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Indeed. I've updated the diary to read
(2) Running a corporation in the interests of its shareholders, commonly described as "maximising shareholder value", and this is generally taken to mean (at least to a good approximation) maximising the value of the shares.
(6) For a corporation to serve the financial interests of shareholders holding well-diversified portfolios, "maximising shareholder value" entails maximising the (suitably weighted) share values of the corporations in their portfolios. (This isn't exactly correct, since investors value not just the "share value", but its effect on portfolio-level risk, etc., but it is a good approximation and can serve as shorthand.)

Regarding the origin of this interpretation of "shareholder value", I don't know, but the definitions in Wikipedia: Shareholder value suggest that it is widespread. Isn't it a good approximation for typical investors, provided that the price reflects the actual value of the company, rather than a confused or fraudulent valuation? (That is, absent the considerations I discuss.)

Note that my purpose is not to praise stock-value = stockholder-value, but to bury or at least dirty it.

Words and ideas I offer here may be used freely and without attribution.

by technopolitical on Sat Dec 23rd, 2006 at 07:16:55 PM EST
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