Events

In the last year, Target, Disney, and Anheuser-Busch collectively vaporized billions of dollars of shareholder value by taking active stands on social issues. These examples spotlight the growing tension between stakeholder capitalism and shareholder capitalism. This session explores companies' rationale for active stands on social issues and research (including Terjesen's) showing a generally negative effect on shareholder value. Terjesen will overview the role of middle managers, with rubber-stamp approval of top managers, particularly in entertainment, technology, and retail industries. This session will also cover the "double dilution of ownership," as although over 100 million Americans own mutual funds, usually through employer-sponsored retirement plans, the companies (Vanguard, Fidelity, State Street) vote the shares and support companies' social initiatives. (For example, Disney shares include 7.6% Vanguard and 6% BlackRock.) Terjesen concludes with implications for firm behavior and performance, including perceived corporate hypocrisy and the potential lost creativity from constrained viewpoint diversity.