NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Do Publicly Traded Corporations Act in the Public Interest?

Roger H. Gordon

NBER Working Paper No. 3303
Issued in March 1990
NBER Program(s):   ME

Models of corporate behavior normally assume that a firm acts in the interest of shareholders, and that shareholders care only about the returns they receive on the shares they own in that firm. But shareholders should also care about the effects of a manager's decisions on the value of shares they own in other firms, on the price they pay as consumers of the firm's output, on the value of the firm's bonds they own, on government tax revenue which finances public expenditures benefiting shareholders, etc. These effects are normally presumed to be of second order. This paper reexamines this presumption, argues that many of these effects are likely to be important, and examines how a variety of conventional conclusions about corporate behavior change as a result.

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Document Object Identifier (DOI): 10.3386/w3303

Published:

  • "Gordon, Roger H. (2003) "Do Publicly Traded Corporations Act in the Public Interest?," Advances in Economic Analysis & Policy: Vol. 3: Iss. 1, Article 2. Available at: http://www.bepress.com/bejeap/advances/vol3/iss1/art2
  • Roger H. Gordon, 2003. "Do Publicly Traded Corporations Act in the Public Interest?," The B.E. Journal of Economic Analysis & Policy, Berkeley Electronic Press, vol. 0(1), pages 2. citation courtesy of

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