Firm Commitment: Why the corporation is failing us and how to restore trust in it
Date Published: 13.06.2013
Should companies be pursuing shareholder interests? This is one of the questions raised by Colin Mayer, Professorial Fellow of Wadham College in his a new book, Firm Commitment.
Exploring the achievements and failures of the corporation, Firm Commitment sets out the potential of the corporation to contribute to prosperity and well-being in the future.
Mayer, who is Peter Moores Professor of Management Studies at the Saïd Business School, believes that the corporation is the most important institution in our lives.
“It clothes, feeds and houses us. It employs and invests our savings. It is the source of economic prosperity around the world and the growth of nations. At the same time it has been a cause of depravation, poverty and environmental degradation and its problems are getting worse,” he writes.
Responding to the question of whether companies need shareholders in an interview with Voices from Oxford, Mayer commented: “The net contribution of stock markets to the financing of companies in the UK is negative.”
“Short term shareholders should not be controlling companies”, he added. “We need to establish companies that have the right incentives to pursue long term interests and have a set of values that we can relate to and believe in.”
Firm Commitment describes why companies are failing to realize their full potential and why in particular this is happening now. The book draws on research concerned with the ownership, governance, control, financing and performance of corporations in many different countries and over extended periods. It sets out a clear set of proposals for reforming the corporation and a process by which these reforms should be implemented.