Is There Real Virtue Behind the Business Roundtable’s Signaling?

At the beginning of the fall semester, I published a blog posting entitled “Milton Friedman on CEOs” which was highly critical of the  Business Roundtable decision to throw Milton Friedman’s shareholder-centric model of corporate governance under the bus in favor of the more politically fashionable “stakeholder” model.  A couple weeks later, I followed that blog posting up with a subsequent posting entitled “The Business Roundtable’s Recipe for Confusion” which links to a WSJ op-ed which argues, among other things, that when companies try to do the government’s job, inefficiency and uncertainty result.  In yesterday’s WSJ, two professors from LSE and Columbia provide empirical support for these hypotheses in an article entitled “Is There Real Virtue Behind the Business Roundtable’s Signaling?“, claiming  that ‘stakeholder capitalism’ fails on its own terms.”

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