Remembering el Dorado

Remembering el Dorado.

 It is the old story of the quest for the greatest fortune of all time. The most powerful and the greediest people in the world came for the treasure hunt first. After came the pirates, the treasure hunters, the vagabonds and the thiefs. Most of the time only these people have been considered to be involved in this quest.

Nonetheless, as soon as the voice was spread, all kind of professionals, eminent professors, political and religious leaders from all around the world left their posts to conquer the treasure. There were many thinkers,  left wing and right wing activists from every part of the world

Apparently even alien visitors came down to earth just to look for the gold.

It as thought to be the fountain at youth first, the old myth according to which people who touched it gained eternal beauty and inmortality. As soon as the thousands of people went to America they found that rumors pointed toward a different yet equally important treasure:

It was the biggest fortune ever imagined, which comprehended blocks of gold, all kinds of jewellery, coins and billets from every part of the world, the fountain of youth and a special futuristic device which gave its user eternal knowledge of the outcomes of the stock exchanges in the whole world. They called this quest the quest for el Dorado.

The quest for el Dorado led to tremendous wars which also led to famine and the near destruction of all humanity. The first to be crushed in battle where the huge and enormous companies and firms their executives and the military men and ambitious politicians who entered the amazon (placed where el Dorado was thought to be located).

The firms and companies entered the amazon humiliating local, indigenous people tricking them into false or hazardous deals. The quest of these greedy firms ended when they met the ambitious military men and politicians.

Although top executives and their companies had an advantage over resources and some private technology military men and politicians had the weapons and all the strategy to confront them. The encounter between these groups led to a 1000 days war which led to no survivors.

The next group, this is professors, scientists intellectuals and other eminent scholars almost came to near good approximations on the location of the gold. At first there was some consensus and apparently the expedition was going in a Good direction.

But, why were academics and scientific minds interested in the quest for el Dorado? This was based on a legend and only in rumors. Any respectable scientific academic or intellectual would refute to participate in this quest. The reason behind this interest was of course, the economic endorsement received by the corporate sector and simply the greed of many of these men.

Internal conflicts were the main reasons for the fragmentation and the failure of this group. Despite this problems began when different theories challenged the established paradigm. The established paradigm contained partial elements of the content and the place of the treasure yet it needed alternative and challenging theories which were never accepted.

More over the rivalry between different disciplines also obstructed the quest. Furthermore, the best academics and scientific minds were did not participated in the quest for the treasure, although they did speculated on the nature of it.

Finally other kinds of people also participated on the quest of the treasure. Many of these people decided to stay near the villages of the amazon conquering and submitting local people.

All of the efforts to find the treasure were not successful. Everyone was invited to find the treasure of el Dorado, although these expeditions were not successful for two main reasons. The first one is that the treasure of el Dorado is not tangible, it did not consisted in material wealth as all of the groups believed.

In second place el Dorado cannot be found. It is already at the reach of everyone. It is in the soul of every human being, it is in earth it is in space and it is in all living creatures. It is independent of hate and abuse and greed and all sincere religions, scientific trends, intellectual endeavours honest corporate initiatives can participate have it and can reach it. It is the universal message of wisdom, peace and love.


A preview of my next posts


Dear friends,

Here are some of the issues that I will post in the future. I will really appreciate your comments and observations.

¿Is there a collision between science and entrepeneurship?

¿What is science? How does science comes out from academia to the outside world?
¿Why is ethics so important to business science?

¿Is there a true business science? what role (if any) do ethics play in the business to be considered as science?

Academia and Innovation

Why is there so little innovation in academia and so much demand for innovative thinking outside the Universities?

Depending on the carreer chosen, the country of studies and your university you will have more or less freedom for creative writing and thinking. In America (understood as the whole continent, not only as the United States of America) there is certainly more creative or free style of learning than in Europe.

This has a positive side as it prepares the student to face challenges and tasks that he or she will find in the real world. On the other hand it has a bad side; there are many students who graduate with the minimum technical skills.

In contrast, and despite the entrance of the Bolonia Convention, European Universities still depend on year or mid year difficult exams. One of the reasons relies of course in tradition. The best Universities in Europe are public and have large numbers of alumni, in classroom, which makes it very difficult to have mid year exams or classwork. Moreover, students in some countries in Europe like the traditional academic system.

The traditional european system has without doubts important advantages. In many European exams the undergraduate exams prepare students for the even more difficult state exams. Moreover, the postgraduate courses such as the PhD or the masters offer students the possibility of getting the profesional skills to succeed as a practitioner or as a researcher, or at least this is what business schools and PhD programs offer. Despite these advantages there are important drawbacks of this system. The first one is that a vast number students rely on the traditional public system not only to pass their exams but to organize their future lives as public servants.

This is how the European University has been traditionally organized. The high costs of masters and the difficult access to the academic positions show the difficulties that student face upon finishing their bachelors degree and their desire in many occations to access the public sector for a more stable position.

Moreover, nowadays getting a masters degree is not a guarantee of accessing to the private practice. The private sector is so competitive and many companies and industries are so powerful and competitive and the labor so accessible for them that they normally hire professionals with an already relevant professional background.

The problems of this option have been clearly shown by the financial and economic crisis. Certainly, one of the most hazardous effect of the financial crisis is the unemployment that young people who rely in the public sector have had to face[1] This is specially true in the case of Spain. This unprecedented high unemployment rate has led to study the causes and solutions for this problem. Evidently, one of the most important causes is the absense of entrepeneural and innovative skills among young people[2].

Certainly, sometimes the rigid and traditional norms of European universities are to blame. In other occations the pasive and depending attitude of Young European bachelor students is also a matter of concern. Most Europeans Universities have carreer advisors and workshops designed to approach young students to the private sector. For example, in some Universities there are seminars and courses given by the University professors to prepare students to the difficult world of the legal profession as well as masters despite this effort, in the mayority of cases there are still not enough participants in these events.

The impact of the financial and economic crisis led to the adoption of several measures specially addressed to tackle the problem of unemployment. Some of these measures included the adoption or assimilation of educational programs which offer degrees close to technical professions such as the ones present in Germany[3].

Another measure consisted in the modernization of the programs present in Universities, an initiative that had already started with the Bolonia convention. Other initiatives consisted in the elaboration of convenants between Universities and the private practice and in the creation of adequate policies from the public sector. Despite the correctness of these measures the persistent unemployment problem and the poor economic figures of several European countries led us to reexamine these measures.

A good way to approach might be to examine the lives of very succesful entrepeneurs, business owners and innovators and their relation with academia. Of course the general rule is that successful students are more successful finding a job in the private market. Despite this fact there are very curious cases that in many occations extraordinary men have been mediocre students or even have drop out from University. Some examples of the latter are the cases of Steve Jobs, Bill Gates and Mark Zuckenberg. Despite droping out there is an undeniable link to their success and academia.

After all, the succesfull projects of these men started as dreams and ideas created in the dormitories and the halls of Universities. What this also demonstate is that really outstanding and creative people soon began to make their own projects or their own schools of thought. This should not come as a suprise, after all the origin of academia can be trace back to the desire of a group of philosophers to create schools of knowledge[4]. Moreover, another crutial issue is that there is an important age to begin the first entrepeneural businesses, the idea is always to make a successfull business.

Nonetheless the there is always a learning process for any venture, this is why the university years are so important. The energy, the curiosity and spirit of this age is ideal for any business or entrepeneurship. The problem is that in some Institutions the course load is so demanding and many times the programs so inflexible that many students end up having to make a decision between studying and undertaking their first proyect. This is certainly one of the reasons why these extraordinary creators and innovators left their studies very soon for other ventures.

The main point of the present article is that despite the irrefutable connection between academia and innovation, there is still great effort and challenges for Universities. Universities should play a crutial role in facilitating the means inside and outside the classroom for students to innovate and interact intellectually. This demands an effort not only from the academic staff but also from students. Students should be active, demanding what is needed at the University, suggesting what kind of new ideas can be integrated in the University and what kind of proposals and innovations can be better to improve the relation between education and innovation.

On their side, the professors, no matter what is their discipline should encourage participation in class the discussion of the relevance of the subject in the present and in the future, this is the way to adequate the needs of education to requirements of the future.




[1] See O Higgins Niall International Labour Office. Geneva. Employment Sector Employment Working paper No. 70. 2010

[2] For more on youth and innovation see Clemensson, Martin, Drying Christensen Jens Dyring, Small Enterprise Programme See how to build an enabling environment for youth entrepreneurship and sustainable enterprises. International Labour Organization, 2010.

[3] Some of the advantages of the German educational system can be seen in the article the German system as a model for education and workforce development. Source: last access 07/04/2014.

[4] On the origin of academy see Gardner, Jostein. Sophie’s world Plato s academy page 70.

The duty of disclosure” s ethical and legal background in U.S. securities law

The duty of disclosure is one of the main pillars of U.S. securities regulation. It is an essential concept of the securities act of 1933 and the Securities Exchange Act of 1934. Disclosure also appears to be also as relevant in the newest securities regulation prompted by financial scandals and the newest financial crisis[1]. Moreover, this duty also finds specific regulation for the specialty of the person, such as in the case of Managers Duty of Disclosure.

Despite the clear relevance which has been given to the duty of disclosure there are important critiques and detractors. This opposition revolves around the idea that the implementation of Disclosure is really a measure which does not contribute to shareholder value. The present chapter explains the concept of Disclosure in U.S. securities in the hopes understanding better its origin, its treatment in the securities legislation and the possible differences it might have with the theory of shareholder value. The same process is to be taken for the notion of shareholder value. By understanding what is currently the notion given to these concepts it will be possible to explain the main discrepancies between these concepts (of course if such was the case)

In order to understand the concept of Disclosure in U.S. securities legislation it is necessary to briefly describe its historical background. Afterwards and explanation on the Fairness and Transparency principles will be developed. These principles have a strong relation with disclosure and their explanation will help us understand better the ethical content of disclosure.

In relation to the concept of shareholder value the explanation of this concept will start with the traditional or classical view of the concept, which identifies shareholder value principally with profit maximization. This section would briefly explain the origin of the term and the past and present economic arguments which endorse it. The analysis of the concept of shareholder value will continue with the critiques that the term has received and and explanation of the alternatives which have been proposed, citing examples of the securities legislation were possible. A special emphasis should be made regarding the alternatives to the classical concept of shareholder value which have emerged after the latest financial and economic crisis.

A. The Concept of Disclosure

The financial crash of 1929 was followed by a series of legislative and governmental responses. The first successful response was the Pecora Hearings, an investigation which sought to understand the main causes of the financial crisis. The investigation was initiated by the Senate banking committee in the U.S. Some of the principal findings of the committee were that they knowingly misled investors as to the desirability of certain securities, engaged in irresponsible behavior and offered privileges to insiders not afforded to ordinary investors[2].

One of the successes of the Committee consisted in revealing the series of abuses that preceded the financial crisis of 1929. The Committee was also successful in revealing the inadequacy of the NYE stock market to conduct the investigation on this matter.[3]

Furthermore, the findings of the Committee were very important from two perspectives. In first place, the hearings highly influenced the subsequent securities acts which were to appear. In second place, the hearings set the grounds to the laissez faire doctrine, a current of though which had dominated the economic activity during the late seventeen century and the early 20 century. Furthermore, and equally as important, the hearings served as a mechanism to inform the public on the operations, the organisms and the persons involved in the crisis. 

Franklin D. Roosevelt was the president in charge of providing a response from the government side to the 1929 financial crisis. In some ways, President Hoover unsuccessful strategy of non intervention set the path for President Roosevelt economic and legal measures of response to the financial and economic crisis.

One of the first issues he addressed was the making of legislation for securities supervision or “Legislation for Federal supervision of traffic in investment securities in interstate commerce.[4]” The purpose or main objective was securities full disclosure[5][6]. This principal objective was strengthened with a regime of civil and criminal responsibility. Surely, these efforts were propitiated by the lost of trust of the public in securities market caused by the financial crisis.

The securities act of 1933 was the first relevant securities legislation in the United States and was elaborated after the financial crisis of 1929 and came into life during the great depression[7]. As William O. and Bates George mention, it is one of the means to endorse the social control over finance[8]. The act was a reaction against abuses and consisted as this text also points out in establishing the duty of full disclosure of the security being offered[9].  The principal objective of the securities legislation is to regulate the initial distribution of securities by issuing to public investors and the goal of the registration is the full disclosure of truthful information regarding the character of the securities offered to the public[10].

As can be extracted from the securities exchange Securities Act of 1934, the main objective continued to be the disclosure of information. In fact the Exchange was considered as the disclosure statue[11].nonetheless, the Securities Exchange act of 1934 differed from the Securities act of 1933 as the securities exchange act of 1934 primarily regulated transactions of securities in the secondary market, that is, sales that take place after a security is initially offered by a company (the issuer)[12].

Moreover the Securities Exchange act also established the Securities Exchange Commission and gave broad powers to this entity[13]. Other reasons for the appearance which can be pointed for the appearance of the Securities Exchange act of 1934 are the many complexities and inadequacies of the Securities Act and the need for an independent administrative body to enforce the federal securities laws, regulate stock market practices, and curb the evils in the stock exchanges themselves[14]. Some of the abuses which the Exchange Act intended to correct were speculation and market manipulation[15]

 The Duty of Disclosure, Fairness and Transparency.

The duty of disclosure had in both securities acts a strong connection with   the need to introduce standards of ethics and the ideas of fairness and transparency[16]. The intention behind fairness and transparency was to be able to ensure the confidence of investors in markets[17]. Of course the problem in using the word “fairness” in securities legislation are the difficulties which appear in trying to provide a proper definition of this concept. A good approximation of fairness consists in identifying the notion with the belief that all investors, big and small, insiders and outsiders, should have equal access to relevant information[18].

A similar but more specific approach to fairness consists in identifying fairness with the notion of transparency. In this case all parties would have access to information relevant to asset valuation, in which case the parties will not have more options. Moreover, the notion of transparency fairness has found the endorsement of some relevant sector of academics and international Organizations. This sector believes transparency, fairness and disclosure increase confidence in investors which also provides the essential liquidity in the market for the markets to work in an efficient way. This line of argument has found space in international regulation[19]. This demonstrates that according to another relevant sector which finds national and international support, transparency and Fairness are principles which can lead to efficient results.

Once an explanation of the concept of disclosure has been explained it will be possible to describe the different arguments relating disclosure and shareholder value. This is a critical issue which is related to the advantages that these measures can really suppose to shareholders. As indicated previously the main objective of the present work consists in analyzing whether the duty of disclosure of managers present in the U.S. securities legislation presents a real interest to shareholder interest.

Both fairness and transparency are relevant manifestations of ethical standards in US securities regulation.

[1] Such is the case of the Dodd Frank Act, in which case there is a specialize legislation in corporate disclosure. See specialized Corporate Disclosure Title XV of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

[2] Introductory comment: A historical Introductory comment: A historical Introduction to the Securities Act of 1933 and the Securities Exchange Act of 1934. Boston College Law School. July 1988.

[3] For a detail explanation of the Pecora Hearings and the role of the Committee see Moss, David, Bolton Cole and Kintgen, Eugene. The Pecora Hearings. Draft. February 13, 2009.

[4] President Roosevelt message to congress March 1933.Ibid. Page 11.

[5]  According to president Roosevelt, the full disclosure would add up to the ancient rule of caveat emptor, the doctrine let the seller beware. Ibid page 12.

[6] An expression which greatly depicts disclosure is a quote by Louis D. Brandeis which was conveniently used by Roosevelt in dealing with the need of disclosure. This expression said that “Publicity is justly commended as a remedy for social and industrial diseases. Sunlight is said to be the best of disinfectants, electric light the most efficient policeman” Source: Brandeis University. Justice Luis D. Brandeis. http://www.brandeis.ed/legacyfund/bio.html.

[7] Moss David, Bolton Cole, Eugene Kintgen “The Pecora Hearings” Draft February 13, 2009

[8] Douglas. William, E. Bates George, The Federal Securities act of 1933 (Last accessed 13/08/2013)

[9] See Landis, James M: the legislative history of the securities act page 37.

[10] Introductory comment: A historical Introductory comment: A historical Introduction to the Securities Act of 1933 and the Securities Exchange Act of 1934.

[11] Taken from Benston, George J. The Required disclosure and the stock market: An evaluation of the securities exchange act of 1934. American Economic Review, Vol. 63, No. 1 (mar., 1973), pp. 132-155. http://www.jstor.or/stable/1803131

[12] Sarkar, Deepa paper prepared for Cornell Law school Clinic. Source (Last accessed 15/08/2013).

[13] The establishment, the functions and the composition of the Securities Exchange Commission can be found in the 4th section of the securities and Exchange act.

[14] Introductory comment: A historical Introductory comment: A historical Introduction to the Securities Act of 1933 and the Securities Exchange Act of 1934. Boston College Law School. July 1988

[15] To understand the reach of market manipulation see W Moore and M. Wiseman Market Manipulation and the exchange act. The University of Chicago Law Review. http/www.jstor.or/stable/1596296.

[16] The principle of transparency in regulation is well explained by the APEC-OECD Regulatory Reform. 2001 According to this work transparency relates to the openness and impartiality of decision making in the design, introduction, administration and enforcement of new or amended regulations. The reform also describes the specific advantages of transparency, an enumeration that serves to understand the relevance of transparency and fairness in disclosure.

The reform considers that transparent and fair regulatory systems are essential to the development of deep and

Liquid capital markets. In second place a system of regulation which is transparent to market participants instills the confidence needed to attract suppliers and users of capital, improves market efficiency and contributes to increased overall economic activity and investment.

Thus according to the OCDE two major contributions of transparency are the improvement of efficient markets and an increase in Public Trust and Confidence. Source:  Promoting Fair and transparent regulation.  Source:

[17] VII. Source: Benston, George J. Required Disclosure and the Stock Market: An Evaluation of the Securities Exchange Act of 1934. . Investor´s Confidence in the Market-Risk and Fairness The American Economic Review, Vol. 63, No. 1 (Mar., 1973) pp 132-155.

[18]Ibid. According to the author the stock market could be considered “fair” if the prices of securities at any point in time are unbiased estimators of their intrinsic values, at least with respect to the financial data which corporations must disclose under the 34 Act. Ibid. page 152.

[19] An example of an international organization which promotes fairness and transparency in securities legislation is the International Organization of Securities Commissions. One of the principal objectives of this organization consists in “ cooperate in developing, implementing and promoting adherence to internationally recognized and consistent standards of regulation, oversight and enforcement in order to protect investors, maintain fair, efficient and transparent markets, and seek to address systemic risks.” One of the specific examples is the issuance of a paper on the objectives and principles of securities Regulation that urged the adoption by all regulators of processes which are consistently applied, comprehensible, transparent to the public, fair and equitable. (Source: Promoting fair and transparent regulation in Securities Markets: A presentation to the APEC_OECD Co-operative initiative on regulation in Securities Markets. Source: )

The decline of shareholder value

This is part of a text that I have written on the duty of disclosure present in US Securities Law which I will share in the near future.


Shareholder value has been  for long accepted as the most relevant corporate strategies. Certainly, the primacy of shareholder value is also the result of economic and ideological perspectives from a historical process. The historical context of shareholder value can be traced back to the emergence of management capitalism to the decisive triumph of capitalism over socialism in the late years of 1980 decade’[1]s.

Before the shareholder value perspective the prevalent managerial trend was managerial capitalism[2]. According to this conception of management was in large measure influenced by the presence and regulation of large public Institutions, the Directors had a fiduciary liaison with the Institution and the shareholder’s value was just one of the collectives which fell inside of Director’s responsibilities[3]. Other sectors included in the Directors and the Managers responsibilities with other stakeholders such as customers, creditors, employees and the community[4]. The triumph of neoliberal views over state interventionism set the stage for a period of market liberalism characterized by strong deregulation and the strengthening of corporations[5]. Certainly, academic´s work had a vital influence in the consolidation of the neoliberal views of the best known intellectuals such as Milton Friedman famous essay on shareholder value in which the author argued that a corporation’s only goal was to maximize its profits[6].

The work which captured the ideas of profit maximization and developed the idea of shareholder value was the paper elaborated by Jansen Michael and Meckling William entitled “”the theory of the firm[7]. Both essays are known for arguing in favor of profit maximization as the main or only objective of corporations. The work of these authors had enormous impact in the creation of the shareholder value concept.  The article integrates three diffent conceptions: the theory of property rights, the agency cost theory and ownership structure theory. Of central importance to the paper is the explanation given regarding the relation of agency between the managers and the firms.

The authors explain that there are several sources of conflict such as the natural tendency of the manager to appropriate the resources of the firm or the problem which can arise if the manager does not employ the necessary effort/ our diligence in his activity. By describing these problems, the authors looked to demote the activity of managers and to favor the shareholder value criteria. By centering all the efforts in the shareholder value the interests of the shareholders or the corporation will be saved. Following Roger Martin  the argument of these authors consisted in the fact that “The the owners were getting short shrift from professional managers who enhanced their own financial well being rather than that of the shareholders. This was bad for shareholders and wasteful for the economy, Jensen and Meckling argued, the managers were squandering corporate and societal resources to  feather their own nests[8].

The notion of shareholder value is thus the result of a specific historical process and until present day it is still a frequently used reference for Managers[9]. The concept has been used as a mean to get efficient results or to maximize profits. The first impression is that it could be a successful mechanism for profit maximization and as mentioned reflects the neoliberal ideas which consolidated during the end of the 1980’s. The theory of shareholder value has been finally elaborated around the notion of the agency contract where shareholder/owners hire directors and these act on their behalf. This concept of shareholder value allows to explain with more detail how the relationship between the stockholders and managers of a corporation fits the definition of a pure agency relationship.

Despite the enormous reception of shareholder value, there is evidence which suggests that the strategy is not the only, the best or even the desired strategy for desirable results[10]. As Denning, Steve suggests, shareholder value encourages hierarchical bureaucracy, it destroys employee morale, it is antisocial in nature, gives business a bad reputation and it cripples job growth[11].

Another argument against the notion of shareholder value consists in that it is a theory which does not take into consideration the long term results of the firm[12]. According to this last critique shareholder value is an overly narrow theory. It is also a measure which does not take into account the full scope of the financial and economic activity, the sense that it ignores that there is a plurality of interest and persons who work around the notion of the firm[13].

The intellectual backbone of shareholder value reflected the economic thinking of an era which did not take into account the role of shareholders in the corporation and of manager’s consumers and other entities involved in the corporate activity.

Moreover, and the following the narrow economic vision of shareholder value from which it was created did not take into consideration that an understanding of the main problem is incomplete without a legal study of the problem. As Lynn A. Stout points out, shareholder value does not take into consideration the notion of “legal entity.”

According to law, the shareholders are not owners of the corporation as the economist Milton Friedman might have argued; there is a contractual relation of the shareholders with the shares. This is of great importance as it shows that the subject regarding shareholders, shares and corporations has necessarily a legal dimension which has to be taken into account. Moreover and as equally important it is a legal entity which gives shareholders limited legal rights.

Alternatives to shareholder value: Stake holder value and Consumer Capitalism

The purpose of describing alternative theoretical approaches to the firm consists in demonstrating that the concept of shareholder value is currently being challenged by other strategies. These new theories of the firm (the stakeholder theory and consumer capitalism) have in common with the Duty of Disclosure exactly the fact that they are all the results of policies or conceptions of the firm which move away from the notion of only recognizing profit maximization as the main objective of the firm.

One of the possible alternatives to shareholder which has already been indicated is the replacement of shareholder value by the concept of stakeholder value[14]. This option would allow to explain the structure and the operations of a corporation in a way that allows to include relevant market participants and issues into the decision making sphere[15]. This would be the case of public institutions, investors, or labor interests. This strategy would allow as well the integration among these concepts. In this case several group interests which have gained enormous importance in the present day and which were completely ignored by shareholder value such as costumers[16].

More over this alternative would certainly be a better option for corporations in the long run than shareholder value[17] criteria. Despite of these evident advantages, the stakeholder value conception has also important inconvenients. For example, as Denning, Steve argues, including a multitude of interests necessarily leads to the existence of different Directors who might have different interests. This situation can certainly lead to conflicts between Managers and Directors, a matter which makes this issue unpractical[18].

 An alternative to stakeholder value is a theory which is gaining now important momentum is the notion of customer value. The advantages of this conception of the firm over the one proposed by share value defenders consists in the fact that it is a theory of the firm which would benefit both shareholders as costumers. It is also a theory which offers as oppose to share holder value, long term solutions as one of its primary objectives consists in creating stable relation with customers. It is also a theory which as it targets or addresses customers offers a high profitability.  Moreover it is a theory which doesn´t necessarily enter into conflict with stakeholder theory or sustainable growth. The reason behind this assertion is that good policies on corporate social responsibilities generally have a positive impact on costumer value.

A corporation with good CSR reputation will enjoy from investor and consumer confidence. The consumer value also serves as a parameter for measuring the successes of corporate social responsibility measures. Following a research by Peloza, John and Shang, Jingzhi, CSR leads to outcomes such as increased customer loyalty, willingness to pay premium prices and lower reputational risks in times of crisis. Moreover, according to the research each of these measures has the potential to support increased profitability[19].

[1] An excellent article on the historical context of shareholder value is the one elaborated by Mizruchi Mark S. and Kimeldor Howard in The Historical Context of Shareholder Value Capitalism ,( Political Power and Social Theory, volume 17, 213-221) According to these authors this facet was characterized by the following institutional conditions: First, most corporations had come to accept the existence of labor unions. Second, the emergence and expansion of a more activist state. In third place, there was a change in social organization and growing activism within corporations. The second stage is the failure of the State to adequately address mainly the economic issues of America and its replacement with the neoliberal policies introduced by Reagan. The final stage coincides with the retreat of the state, labor and the banks from control of corporations and the rise of institutional investors and financial analysts.

[2] The rise of managerial capitalism in the United States is very well explained by Lazonick, William in “Organizational Capabilities in American Industry: The rise and Decline of Managerial Capitalism”. The author relates the rise of  managerial capitalism with the arising of organizational capabilities in American Industry, which were means to coordinate, integrate and plan divisions of labor to organize goals. According to the author managerial capitalism was both a cause and effect of the growth of American or the growing and technical and social complexity of the specialized divisions of labor are explanations of the emergence of managerial capitalism (p1.),

[3] Lynn A. Stout: The shareholder value Myth: Cornell Law school-Jack G. Clarke Business Law Institute. April 1, 2013. European Financial Review, April-May 2013.

[4] Ibid. Page 2.

[5] As Mizruchi, Mark S. and Kumeldorf, Howard point out, in the period of 1980´s American presidency, “by freeing up markets and implementing fiscal and tax policies designed to encourage investment americans would enjoy a level of personal freedom never before experienced under the shadow of big government. (p 6)   

[6] Friedman, Milton “The social responsibility of business is to increase its profits, New York Times Magazine, September 13, 1970.

[7]  C. Jensen, Michael, Meckling William H. The Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economic 3. Received January 1976.

[8] Martin, Roger. The age of customer capitalism. The magazine January 2010. Harvard Business Review

[9] Despite recent publication which severly critique shareholder  value ( see Jesse Eisinger, “Challenging The Long-Held Belief in ‘Shareholder Value’”, New York Times, (June 27, 2012); Joe Nocera, “Down With Shareholder Value,” New York Times (August 10,2012); Andrew Ross Sorkin, “Shareholder Democracy Can Mask Abuses,” New York Times, shareholder value theory is still a used criteria and is still defended by many authors ( see Why is shareholder value still matters. Hansell, Gerry and Olsen, Eric. Bloomberg Business week. Companies & Industries. March 23, 2010.


[10] According to Stout, Lynn points out the only empirical finding that has been replicated “ is that when governance changes cause directors to sell a company, the buyer pays a premium over market price. Cornell Law school- Jack G. Clarke Business Law Institute. April 1, 2013. European Financial Review, April-May 2013.

[11] Denning, Steve. Can the dumbest Idea in the world be saved?  last accessed 25/08/2013.

[12] As Stout, Lynn A. points out there is strong evidence which demonstrates that the shareholder value is not an adequate strategy especially for policymakers. According to the author “shareholder value-increasing strategies that are profitable for one shareholder in one period of time can be bad news for shareholders collectively over a longer period of time.”(p4).

[13] The article Corporate Governance: Stakeholder Value Versus Shareholder Value Charreauz, Gerard and Desbrieres, Philippe propose the replacement of the concept of shareholder value by the notion of stakeholder value. According to the authors, stakeholder value is a more suitable definition as it permits the formation of the pluralist view of the firm and stakeholder value. Charreaux, Gerard and Desbrieres Philippe. Corporate Governance: Stakeholder Value Versus shareholder value. Journal of Management and Governance 5: 107-128, 2001.

[14] Following Freeman, R. Edward “Stakeholer theory of the modern corporation” stakeholders are groups, individuals who benefit from or are harmed by, and whose rights are violated or respect by corporate actions.

[15] A good explanation of the stakeholder theory can be found in Donaldson Thomas and Preston Lee E. “The stakeholder theory of the Corporation: Concepts, Evidence, and implications” According to the author the theory of stakeholder value can be understood according to three different views: the descriptive, the instrumental and the normative aspects.

In synthesis, the descriptive point of view of the author argues that stakeholder theory is used to describe and to explain, specific corporate characteristics and behaviors. According to the author, the instrumental perspectives uses of stakeholder theory to make a connection between stakeholder approaches and commonly desired objectives such as profitability (p7) finally the normative theory tries to interpret the idea of investor owned corporation on the basis of philosophical doctrines. Another issue of great relevance to understand the concept of stakeholder value dealt by the author consists on the issue regarding the justification problem or why is this theory relevant or better than other theories. Source: The academy of Management Review, Vol. 20, No 1 (Jan., 1995), pp.65-91. Published by Academy of Management. Stable URL:

[16] A close idea to stakeholder value is presented by   Rebernak Kathee. In this case the author argues that idea of integrating sustainable principles into corporate strategy and implementing them in operations would generate business value. As the author expresses this would demonstrate that shareholder value does not suffer in the pursuit of “sharevalue”.

(Source: Framework strategies for sustainable advantage, 2012. From last accessed 25/08/2013) 

[17] Ibid. In this article the authors stand out that corporate governance as a crucial criteria for value creation. The authors intend to give a definition of  stakeholder value in accordance to a pluralist view of the firm( p 108)

[18] Denning, Steve “Is the Tyranny of shareholder value finally ending?  The risk of return to garbage organizations. According to the author the problem of the concept of stakeholder value is that it  has the danger of going back to “garbage organizations” characterized by “ a variety of inconsistent and ill defined preferences.”  8/29/2012 (Source last accessed 26/08/2013 p).

[19] Peloza, John and Shang Jingzhi “Sustainability and Customer Value. Sustainability Matters. Why and how Corporate Boards should become involved. The conference Board Center for Sustainability.  The main hypothesis of this article is that CSR activities have the potential different forms of value for the customers. (p53)

¿Por qué escribir en un Blog?

He tratado en varias ocasiones de escribir en mi Blog. Por cuestiones de tiempo no le he dado el tiempo que se merece. Ahora que me encuentro en un lugar de manera permanente espero realizar esto con más frecuencia. Antes de retomar la actividad bloguera me parece que lo más sensato consiste en explicar por que es importante escribir en un blog. Aunque seguro hay una cantidad de razones (espero que algunas salgan como comentarios del blog) He decidido incluir de manera no exhaustiva las que a mi entender son las más relevantes. Desde mi punto de vista la razón primordial es que escribir en un blog es la manifestación máxima de la libertad de expresión en la era moderna. Esto puede que en presente parezca algo obvio, pero si nos ponemos a pensar hasta hace solo unos anos las publicaciones por internet estaban todas bajo el control o el dominio de las empresas tecnológicas. La vida internauta de la gente común se limitaba al intercambio o a la lectura de información proveniente de otras fuentes. Junto a otros medios, el blog es un medio de participación directa de los ciudadanos en el proceso de difusión de la información a través del internet. Esto es un gran paso para todos los ciudadanos ya que esta opción ofrece a la gente un sin número de posibilidades ya sea para dar a conocer sus opiniones, como una herramienta de negocio o bien como una alternativa para la difusión del conocimiento. Esta última cuestión es lo que me lleva a la siguiente razón de la importancia del blog. El blog permite a la gente participar en la transmisión del conocimiento. En la actualidad el conocimiento sigue siendo, al igual que la información en general monopolizado por muchas instancias. Esto no es una crítica a las respectivas y necesarias autoridades, sino más bien una llamada de atención a la necesaria participación ciudadana en el proceso de creación y difusión del conocimiento. El internet permite transmitir información a una velocidad que antes era impensable. Existen comunidades con más fácil acceso a la información veraz, esta información puede llegar sin lugar a duda a comunidades que tienes más difícil acceso a los medios modernos de comunicación. Por otro lado, el blog es una manera que facilita la transmisión de información, que si bien debe contar con las necesarias reglas de autoría, permite a los ciudadanos expresar sus intereses culturales, intelectuales y profesionales sin la necesidad de someterse a los siempre duros y a veces innecesarios procesos de evaluación, para poder generar ideas. Y es que, y así me gustaría terminar, el blog también es una herramienta al alcance de todos los ciudadanos que fomenta la innovación. Forma parte del proceso de innovación pues permite que la gente genere y difunda sus ideas. Las ideas al fin y al cabo son la base de toda creación humana. Habrá relatos o cuentos de todo tipo y lectores de todo tipo también pero creo que, siempre que se realice con respeto al prójimo deberá siempre fomentarse.

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