Shareholder capitalism is the overarching theme in university finance courses. It is taught from the outset in Finance 101. Its central maxim is that the purpose of a business is to create wealth for its owners. This principle underlies the various analytical tools that we develop in corporate finance courses. 

What finance courses typically fail to address is how the focus on shareholders leaves everyone else. If the firm's goal is to maximize shareholder value, what does that mean for the other stakeholders and the rest of society? 

Because finance courses ignore these types of questions, a void was created. The void has been filled with inaccurate answers that mischaracterize shareholder capitalism. At the same time, critics of shareholder capitalism have been promoting various substitutes, such as ESG, which encourage firms to pursue social and environmental causes. But these substitutes do not come as advertised and create a whole new set of problems.

I wrote this book to address all of these issues. It paints a more accurate picture of shareholder capitalism and the various frameworks vying to replace it. The book is nontechnical. You don't need a business or finance background to understand it. 

Here is a 15-minute talk summarizing some of the main themes in the book. You can also watch me discuss the book at a book forum hosted by the Cato Institute. You can order a copy of the book here.

Endorsements

“Shareholder capitalism is accused of being the cause of all the world’s problems. This eye-opening book highlights that shareholder capitalism involves mutually beneficial trade, pursuing bold innovations that address society’s challenges, and creating long-term value for stakeholders. It’s based on sound economic principles, not ideology, yet is highly readable and brimming with real-world examples. Read it—it will change the way you think.” 

-Alex Edmans, author of Grow the Pie: How Great Companies Deliver Both Purpose and Profit and professor of finance at the London Business School

“This book is a must-read for anyone who wants to understand what shareholder capitalism is and what it is not. David McLean offers a full-throated defense of shareholder capitalism by drawing on historical insights from notable economists such as Adam Smith, Joseph Schumpeter, Milton Friedman, and Thomas Sowell and linking them to current real-world examples. This highly readable book compares and contrasts the shareholder capitalism approach to the stakeholder capitalism approach to dispel common misinformation, misconceptions, and fallacies about both.” 

-Michael Piwowar, former commissioner of the U.S. Securities and Exchange Commission and former member of the President’s Council of Economic Advisers

“Few ideas are more salient than the shareholder wealth maximization principle for continued growth and survival of humanity. David McLean not only blunts the serious assaults leveled against it but presents the shareholder wealth maximization principle in a lucid, accessible narrative that is sprinkled with historical anecdotes. The book has the potential to set straight those who have misguided concerns about the shareholder model and arm the believers with cogent arguments extolling the virtues of maximizing shareholder wealth.” 

-S. P. Kothari, professor of accounting and finance at MIT and former chief economist and director at the U.S. Securities and Exchange Commission