Question A:

Having companies run to maximize shareholder value creates significant negative externalities for workers and communities.

Responses weighted by each expert's confidence

Question B:

Appropriately managed corporations could create significantly greater value than they currently do for a range of stakeholders – including workers, suppliers, customers and community members – with negligible impacts on shareholder value.

Responses weighted by each expert's confidence

Question C:

Effective mechanisms for boards of directors to ensure that CEOs act in ways that balance the interests of all stakeholders would be straightforward to introduce.

Responses weighted by each expert's confidence

Question A Participant Responses

Participant University Vote Confidence Bio/Vote History
Campbell
John Campbell
Harvard
Agree
6
Bio/Vote History
Cochrane
John Cochrane
Hoover Institution Stanford
Strongly Disagree
10
Bio/Vote History
Question misuses "externality." Voluntary market transactions are not externalities. Having? Absence of government coercion is not "having."
Cornelli
Francesca Cornelli
Northwestern Kellogg
Uncertain
7
Bio/Vote History
It is impossible to make an encompassing statement valid for all industries
-see background information here
-see background information here
Diamond
Douglas Diamond
Chicago Booth
Disagree
8
Bio/Vote History
Alternative forms of governance do not address externalities directly. Corporate reputation and shareholder governance is sufficient.
Duffie
Darrell Duffie
Stanford
Agree
9
Bio/Vote History
This is the point of regulation. For examples, pollution and labor regulations are intended to mitigate such effects.
Eberly
Janice Eberly
Northwestern Kellogg
Disagree
7
Bio/Vote History
Could have more confidence if comparing to a real alternative or counterfactual.
French
Kenneth R. French
Tuck Dartmouth
Disagree
6
Bio/Vote History
Gabaix
Xavier Gabaix
Harvard
Disagree
8
Bio/Vote History
There are always pecuniary externalities. From firms to workers they're typically *positive*: more capital is better for workers.
Goldstein
Itay Goldstein
UPenn Wharton
Agree
9
Bio/Vote History
Graham
John Graham
Duke Fuqua
Disagree
9
Bio/Vote History
One can not maximize shareholder value without considering other stakeholders. There might be externalities but probably not significant
Hansen
Lars Hansen
UChicago
Disagree
8
Bio/Vote History
Negative externalities inflicted by corporate activity are best handled with well designed legal structures and Piguovian taxation.
Harvey
Campbell R. Harvey
Duke Fuqua
Strongly Disagree
9
Bio/Vote History
Did you mean "statistically" significant? Using the word 'significant', influences the response.
Hirshleifer
David Hirshleifer
USC
Disagree
7
Bio/Vote History
Thriving and competitive businesses probably tends to generate positive externalities for the community.
Hong
Harrison Hong
Columbia
Agree
9
Bio/Vote History
Workers are affected by externalities from firm production such as carbon emissions, which lead to global warming and extreme weather.
Jiang
Wei Jiang
Emory Goizueta
Disagree
8
Bio/Vote History
Shareholder value, unlike stock price, is a long-term concept that incorporates all constituencies that are important to business success.
Kaplan
Steven Kaplan
Chicago Booth
Disagree
10
Bio/Vote History
Kashyap
Anil Kashyap
Chicago Booth
Disagree
3
Bio/Vote History
sometimes, but doubtful that this is pervasive
Koijen
Ralph Koijen
Chicago Booth
Agree
3
Bio/Vote History
Kuhnen
Camelia Kuhnen
UNC Kenan-Flagler
Disagree
8
Bio/Vote History
If the regulatory environment penalizes eggregious negative firm externalities, firms can maximize shareholder value without hurting others.
Lo
Andrew Lo
MIT Sloan
Disagree
10
Bio/Vote History
Lowry
Michelle Lowry
Drexel LeBow
Agree
7
Bio/Vote History
This is the motivation for regulation, including regulation related to labor, the environment, and antitrust
Ludvigson
Sydney Ludvigson
NYU
Agree
8
Bio/Vote History
Redistributive shocks matter. They have persistently redistributed rewards to shareholders and away from workers in the last 30-40 years
-see background information here
Maggiori
Matteo Maggiori
Stanford GSB
Agree
10
Bio/Vote History
Matvos
Gregor Matvos
Northwestern Kellogg
Uncertain
8
Bio/Vote History
Depends on context. Ex. with poor environmental regulation, a profit maximizing company will pollute. With effective regulation, it won’t.
Moskowitz
Tobias Moskowitz
Yale School of Management
Disagree
5
Bio/Vote History
It's not clear theoretically that "significant negative externalities" would be created and I'm not aware of strong empirical work showing.
Nagel
Stefan Nagel
Chicago Booth
Strongly Agree
9
Bio/Vote History
There is no reason why shareholder max. should lead firms to internalize these externalities (unless, e.g., incentivized by regulation).
Parker
Jonathan Parker
MIT Sloan
Uncertain
4
Bio/Vote History
Profit maximization leads to productivity and economic growth but also, absent enforcement, to less competition and more carbon emissions.
Parlour
Christine Parlour
Berkeley Haas
Uncertain
8
Bio/Vote History
It depends on the industry. Some generate negative externalities (social and environmental), while others generate large consumer benefits.
Philippon
Thomas Philippon
NYU Stern
Agree
8
Bio/Vote History
Unless government taxes/subsidies perfectly cancel all externalities, including market power, maximizing SV is not socially optimal.
Puri
Manju Puri
Duke Fuqua Did Not Answer Bio/Vote History
Roberts
Michael R. Roberts
UPenn Wharton
Uncertain
8
Bio/Vote History
Weakly agree. Maximizing shareholder value can create negative externalities for other stakeholders, but the effects are heterogeneous.
Sapienza
Paola Sapienza
Northwestern Kellogg
Disagree
7
Bio/Vote History
Certain companies generate very negative externalities, but the statement is not valid in general
Seru
Amit Seru
Stanford GSB
Uncertain
9
Bio/Vote History
Depends
Stambaugh
Robert Stambaugh
UPenn Wharton
Uncertain
7
Bio/Vote History
Depends on the regulatory environment in which companies maximize shareholder value.
Starks
Laura Starks
UT Austin McCombs
Disagree
7
Bio/Vote History
Stein
Jeremy Stein
Harvard
Agree
8
Bio/Vote History
Stroebel
Johannes Stroebel
NYU Stern Did Not Answer Bio/Vote History
Stulz
René Stulz
OSU Fisher School
Disagree
10
Bio/Vote History
Shareholder wealth maximization can make both workers and communities better off. Neither workers nor communities benefit from failing firms
Sufi
Amir Sufi
Chicago Booth
Uncertain
5
Bio/Vote History
There are examples in which shareholder maximization has led to negative externalities, but hard to argue this is a rule.
Titman
Sheridan Titman
UT Austin McCombs
Disagree
10
Bio/Vote History
There are clearly instances where their are externalities associated with corporate actions, but this is not the general rule
Van Nieuwerburgh
Stijn Van Nieuwerburgh
Columbia Business School
Agree
6
Bio/Vote History
Climate externalities are good example of something shareholder value maximization typically ignores. Short-termism of shareholders another.
Werner
Ingrid M. Werner
OSU Fisher School
Disagree
8
Bio/Vote History
Whited
Toni Whited
UMich Ross School
Agree
6
Bio/Vote History

Question B Participant Responses

Participant University Vote Confidence Bio/Vote History
Campbell
John Campbell
Harvard
Uncertain
4
Bio/Vote History
Negative externalities to stakeholders are likely meaningful, but correcting them through "appropriate management" is easier said than done.
Cochrane
John Cochrane
Hoover Institution Stanford
Strongly Disagree
10
Bio/Vote History
Horrible question. "Appropriately managed" can increase value for all. But by who? Question implies government. Sentences with subjects pls!
Cornelli
Francesca Cornelli
Northwestern Kellogg
Agree
8
Bio/Vote History
There are several instances where shareholders' value can focus on short term goals only, while a longer term approach can improve value
-see background information here
Diamond
Douglas Diamond
Chicago Booth
Strongly Disagree
9
Bio/Vote History
If there is a large difference in actions, given reputation, there would be a large effect on shareholder value.
Duffie
Darrell Duffie
Stanford
Uncertain
8
Bio/Vote History
Hard to know. But if true, this would imply almost no mis-alignment of incentives between shareholders and the others. That seems unlikely.
Eberly
Janice Eberly
Northwestern Kellogg
Disagree
7
Bio/Vote History
Appropriately managed seems unclear/aspirational if the goal is the create additional value. It would be interesting to know what changes.
French
Kenneth R. French
Tuck Dartmouth
Strongly Disagree
7
Bio/Vote History
Gabaix
Xavier Gabaix
Harvard
Strongly Disagree
8
Bio/Vote History
Very doubtful, except for a few cases like (i) local monopsony power (ii) pollution and such externalities.
Goldstein
Itay Goldstein
UPenn Wharton
Uncertain
9
Bio/Vote History
Graham
John Graham
Duke Fuqua
Disagree
9
Bio/Vote History
some value could possibly be created for other stakeholders -- but not significantly more
Hansen
Lars Hansen
UChicago
Uncertain
8
Bio/Vote History
Some corporations are poorly managed. But I fail to see an alternative that dominates without confronting tradeoffs among stakeholders.
Harvey
Campbell R. Harvey
Duke Fuqua
Uncertain
5
Bio/Vote History
Hirshleifer
David Hirshleifer
USC
Strongly Disagree
8
Bio/Vote History
A target of serving a range of stakeholders gives managers license to pursue their own preferences and self-interest.
Hong
Harrison Hong
Columbia
Strongly Disagree
9
Bio/Vote History
Externalities such as global warming are costly to address, and require carbon taxes or sustainable finance mandates which cost shareholders
Jiang
Wei Jiang
Emory Goizueta
Agree
8
Bio/Vote History
If office temperature could dial up five degrees in summer, everybody--workers, shareholders, and Planet--is better off. Just an example.
Kaplan
Steven Kaplan
Chicago Booth
Strongly Disagree
10
Bio/Vote History
There is no reason to think that firms are as inefficient as an affirmative answer would imply.
Kashyap
Anil Kashyap
Chicago Booth
Disagree
3
Bio/Vote History
Koijen
Ralph Koijen
Chicago Booth
Disagree
5
Bio/Vote History
Kuhnen
Camelia Kuhnen
UNC Kenan-Flagler
Uncertain
8
Bio/Vote History
There are trade-offs when trying to please several types of stakeholders.
Lo
Andrew Lo
MIT Sloan
Agree
10
Bio/Vote History
Lowry
Michelle Lowry
Drexel LeBow
Strongly Agree
7
Bio/Vote History
Ludvigson
Sydney Ludvigson
NYU
Uncertain
6
Bio/Vote History
Boards could probably maximize value for a wider range of stakeholders, but not enough evidence to know how this would affected shareholders
Maggiori
Matteo Maggiori
Stanford GSB
Agree
8
Bio/Vote History
Matvos
Gregor Matvos
Northwestern Kellogg
Disagree
6
Bio/Vote History
Companies benefit from a pro-stakeholder reputation. If such actions have negligible cost to shareholders, they want to implement them.
Moskowitz
Tobias Moskowitz
Yale School of Management
Disagree
7
Bio/Vote History
Hard to imagine creating significant additional value for stakeholders without significant drop in share value.
Nagel
Stefan Nagel
Chicago Booth
Disagree
5
Bio/Vote History
Seems unlikely to be possible without some cost for shareholders
Parker
Jonathan Parker
MIT Sloan
Strongly Disagree
7
Bio/Vote History
Corporate management is responding well to the legal environment that makes it profitable to act non-competitively, to pollute, etc.
Parlour
Christine Parlour
Berkeley Haas
Disagree
7
Bio/Vote History
Changing inefficient companies can increase value to various stakeholders. Changing efficient companies just moves value among groups.
Philippon
Thomas Philippon
NYU Stern
Uncertain
3
Bio/Vote History
Maximizing SV is unlikely to be first best, but interventions, except pro-competition ones, are likely to create significant costs as well.
Puri
Manju Puri
Duke Fuqua Did Not Answer Bio/Vote History
Roberts
Michael R. Roberts
UPenn Wharton
Uncertain
8
Bio/Vote History
What exactly does "appropriately managed" mean and who decides?
Sapienza
Paola Sapienza
Northwestern Kellogg
Agree
8
Bio/Vote History
general statement, it does not apply to firms creating large externalities (e.g polluters), which are not the majority of firms
Seru
Amit Seru
Stanford GSB
Strongly Disagree
9
Bio/Vote History
Unlikely, unless one believes host of firms are poorly governed.
Stambaugh
Robert Stambaugh
UPenn Wharton
Disagree
8
Bio/Vote History
Starks
Laura Starks
UT Austin McCombs
Uncertain
4
Bio/Vote History
It is not clear that it would be negligible costs. Also I would somewhat agree with the statement but that wasn't an option.
Stein
Jeremy Stein
Harvard
Disagree
7
Bio/Vote History
Stroebel
Johannes Stroebel
NYU Stern Did Not Answer Bio/Vote History
Stulz
René Stulz
OSU Fisher School
Disagree
10
Bio/Vote History
Sufi
Amir Sufi
Chicago Booth
Uncertain
5
Bio/Vote History
Again, hard to state this as a rule. There are certainly firms for which the statement could be true.
Titman
Sheridan Titman
UT Austin McCombs
Disagree
10
Bio/Vote History
There are always tradeoffs
Van Nieuwerburgh
Stijn Van Nieuwerburgh
Columbia Business School
Agree
6
Bio/Vote History
Good management focused on the long-run health and well-being of the company, its employees, and its community attracts the best resources.
Werner
Ingrid M. Werner
OSU Fisher School
Agree
8
Bio/Vote History
Whited
Toni Whited
UMich Ross School
Disagree
6
Bio/Vote History

Question C Participant Responses

Participant University Vote Confidence Bio/Vote History
Campbell
John Campbell
Harvard
Disagree
7
Bio/Vote History
It is extremely difficult to incentivize CEOs to consider all stakeholders without empowering them to pursue their own selfish interests.
Cochrane
John Cochrane
Hoover Institution Stanford
Strongly Disagree
10
Bio/Vote History
Passive agian. By who? By boards or by regulators? Interests are traded, not balanced. A gains, B loses. Owners pillaged, golden goose dies
Cornelli
Francesca Cornelli
Northwestern Kellogg
Agree
7
Bio/Vote History
There are measures that would not solve all the problems but would definitely bring to an improvement
-see background information here
Diamond
Douglas Diamond
Chicago Booth
Strongly Disagree
9
Bio/Vote History
I do not see an easy way to provide alternative goals. It will become political.
Duffie
Darrell Duffie
Stanford
Disagree
9
Bio/Vote History
This doesn't seem "straightforward." It would be complicated to balance the potential conflicts of interests among all stakeholders.
Eberly
Janice Eberly
Northwestern Kellogg
Strongly Disagree
8
Bio/Vote History
Related to the previous question - how would board effectiveness change in practice?
French
Kenneth R. French
Tuck Dartmouth
Strongly Disagree
8
Bio/Vote History
Shareholder value maximization is the least ambiguous and most well defined of the many alternative objectives I have seen.
Gabaix
Xavier Gabaix
Harvard
Strongly Disagree
10
Bio/Vote History
Some innovations would be good (e.g. local externalities), but the scope is government policy, not board structure
Goldstein
Itay Goldstein
UPenn Wharton
Disagree
9
Bio/Vote History
Graham
John Graham
Duke Fuqua
Disagree
8
Bio/Vote History
1) often hard to measure stakeholder welfare; 2) an 'end around' can occur relative to an explicit measure/variable to negate the intent
Hansen
Lars Hansen
UChicago
Disagree
8
Bio/Vote History
The term ``balance’’ is not operational without resolving tradeoffs among stake holders in arbitrary and potentially harmful ways.
Harvey
Campbell R. Harvey
Duke Fuqua
Disagree
8
Bio/Vote History
Hirshleifer
David Hirshleifer
USC
Disagree
7
Bio/Vote History
Hong
Harrison Hong
Columbia
Disagree
6
Bio/Vote History
Unclear if boards are meant to replace regulation, taxes or other forms of external market signals.
Jiang
Wei Jiang
Emory Goizueta
Disagree
8
Bio/Vote History
Kaplan
Steven Kaplan
Chicago Booth
Strongly Disagree
7
Bio/Vote History
Kashyap
Anil Kashyap
Chicago Booth
Strongly Disagree
5
Bio/Vote History
it is a hornet's nest
-see background information here
Koijen
Ralph Koijen
Chicago Booth
Disagree
5
Bio/Vote History
Kuhnen
Camelia Kuhnen
UNC Kenan-Flagler
Strongly Disagree
9
Bio/Vote History
Corporate governance is hard to do even when the objective is simple (maximize share price). Not to mention when the objective is complex.
Lo
Andrew Lo
MIT Sloan
Disagree
10
Bio/Vote History
Lowry
Michelle Lowry
Drexel LeBow
Disagree
1
Bio/Vote History
Ludvigson
Sydney Ludvigson
NYU
Uncertain
8
Bio/Vote History
Not aware of many good examples of this
Maggiori
Matteo Maggiori
Stanford GSB
Disagree
10
Bio/Vote History
This is a complex problem theoretically, with in practice many political and practical implementation limitations. Not straightforward.
Matvos
Gregor Matvos
Northwestern Kellogg
Disagree
8
Bio/Vote History
Mechanisms for boards of directors can struggle to balance shareholder interests, whose goals are much more aligned than stakeholders’
Moskowitz
Tobias Moskowitz
Yale School of Management
Disagree
2
Bio/Vote History
Very hard to answer this question without having more evidence on the first two questions and how value is created for other stakeholders.
Nagel
Stefan Nagel
Chicago Booth
Uncertain
3
Bio/Vote History
Parker
Jonathan Parker
MIT Sloan
Strongly Disagree
8
Bio/Vote History
There is no simple way to entirely change corporate governance. It would be a mess like Brexit.
Parlour
Christine Parlour
Berkeley Haas
Strongly Disagree
9
Bio/Vote History
Incentives are agreed on before complex situations arise. Balancing all possible interests and future events is almost impossible.
Philippon
Thomas Philippon
NYU Stern
Disagree
8
Bio/Vote History
They may be feasible, they are certainly not easy to implement.
Puri
Manju Puri
Duke Fuqua Did Not Answer Bio/Vote History
Roberts
Michael R. Roberts
UPenn Wharton
Disagree
8
Bio/Vote History
Challenging to ensure managers are aligned with shareholders. Adding additional interests will likely complicate matters even if worthwhile.
Sapienza
Paola Sapienza
Northwestern Kellogg
Disagree
7
Bio/Vote History
When the conflict between shareholder maximization and societal goals emerge, the board should not choose, better to let society regulate
Seru
Amit Seru
Stanford GSB
Strongly Disagree
7
Bio/Vote History
Stambaugh
Robert Stambaugh
UPenn Wharton
Disagree
8
Bio/Vote History
Starks
Laura Starks
UT Austin McCombs
Disagree
6
Bio/Vote History
Boards have many mechanisms to provide incentives for CEOs but there exists a lot of uncertainty regarding their efficacy.
Stein
Jeremy Stein
Harvard
Disagree
8
Bio/Vote History
Stroebel
Johannes Stroebel
NYU Stern Did Not Answer Bio/Vote History
Stulz
René Stulz
OSU Fisher School
Disagree
8
Bio/Vote History
I am not convinced that the mechanisms proposed so far would work.
Sufi
Amir Sufi
Chicago Booth
Uncertain
5
Bio/Vote History
Titman
Sheridan Titman
UT Austin McCombs
Strongly Disagree
10
Bio/Vote History
Van Nieuwerburgh
Stijn Van Nieuwerburgh
Columbia Business School
Disagree
6
Bio/Vote History
Boards are imperfect governance devices, often co-opted and controlled by senior management.
Werner
Ingrid M. Werner
OSU Fisher School
Uncertain
8
Bio/Vote History
Whited
Toni Whited
UMich Ross School
Uncertain
1
Bio/Vote History