Vanderbilt Journal of Transnational Law

First Page



Business corporations can have many purposes. The shareholder wealth maximization goal is the proper one for business. This maximization, however, must look to the long-term as well as the short-term. Terrorism is a major threat to the long-term stability, profitability, and even viability of business corporations. Because of a focus on the short-term to the exclusion of the long-term, businesses are likely to shirk their responsibilities related to terrorism and its causes. A paradigm-shift is necessary to bring business to accept their responsibilities and internalize their costs...

This Article will not challenge the shareholder wealth maximization goal. Instead, this Article will insist on it. All too often, the shareholder wealth maximization goal is praised in name and ignored in practice. The decisions of business corporations are decisions requiring tradeoffs. All tradeoffs are complex and tinged with uncertainty. Accordingly, the scope of governance discretion must be broad. In practice, rather than in theory, all too often the shareholder wealth maximization goal is ignored. Agents of the principal too narrowly define value streams (when it suits the agent's preference), and both agents and the market misapply discounting to present values.