TY  - JOUR
AU  - Gordon,Roger H.
TI  - Do Publicly Traded Corporations Act in the Public Interest?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 3303
PY  - 1990
Y2  - March 1990
UR  - http://www.nber.org/papers/w3303
L1  - http://www.nber.org/papers/w3303.pdf
N1  - Author contact info:
Roger H. Gordon
Department of Economics 0508
University of California, San Diego
9500 Gilman Drive, Dept. 0508
La Jolla, CA 92093
Tel: 858/534-4828
Fax: 858/534-7040
E-Mail: rogordon@ucsd.edu
AB  - 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.
ER  -