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Roll of cash with heart shadow

Milton Friedman said that companies’ sole social responsibility is to make profits and put their shareholders first. But fights for social and economic equality are playing out across the United States, and companies are finding it near impossible not to weigh in.

Chicago Booth’s Steven Neil Kaplan argues that the pursuit of profits has helped shareholders, but it has also played a part in lifting billions of people around the world out of poverty. It would be hard to measure companies’ performance by any other gauge, he notes.

But Chicago Booth’s Luigi Zingales, director of Booth’s Stigler Center for the Study of the Economy and the State, says that being a good steward of employees, communities, and the environment can help maximize shareholder value. But he further argues that shareholders are concerned about more than just making money, and that companies should focus on maximizing shareholder welfare, not shareholder value.

What looks like corporate altruism is frequently something else, finds Chicago Booth’s Marianne Bertrand. Her research demonstrates that corporate charitable giving is often designed to curry favor with influential politicians.

Capitalisn’t: Shareholders vs. Stakeholders


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