January 22, 2024
Bloomberg recently published an article featuring Keith Ericson, Professor of Markets, Public Policy and Law’s working paper, “What Do Shareholders Want? Consumer Welfare and the Objective of the Firm.”
While the traditional view is that shareholders are solely focused on maximizing stock prices, many have additional preferences, such as promoting the overall value of companies.
Ericson’s research highlights that, “Firms have a unique technology for improving consumer welfare: lowering inefficient price markups, which increases consumer welfare more than it lowers profits.”
With shifting dynamics in finance, shareholder interests extend beyond just profit maximization, influencing corporate behavior in diverse ways.