Shareholder Value Versus Bondholder Value: - a Critical Analysis

Since RAPPAPORT constituted the shareholder value concept in the early 80s, protagonists of the economy have largely agreed upon: Maximizing shareholder value should be in the centre of a successful corporate management. However, with increasing dissemination and difficulties in implementing the concept in practice, critics on the shareholder value approach have become louder. Next to scepticism on the general reliability of shareholder value analysis and its suitability for evaluating a firm and its strategies, a lively discussion about the justification of the superior treatment of the interests of a company's shareholders over other stakeholders broke out. Heavily criticized, the basic assumption of the concept ? the axiom that the very purpose of every company is to maximize value for its owners ? started to falter. The author Sandra Weiss picks up the current controversial discussion on vital management principles by enlarging upon an aspect that has been poorly covered up to now, but will undoubtedly be of increasing importance in the near future: the meaning of bondholder value and its (in) compatibility with shareholder value maximization.