Who owns listed firms?
Friday, April 02, 2021
This solitary prescriptive path to corporate glory came into vogue and created a hum of excitement in the early 1970s. The pioneering proponent of this view, Milton Friedman; an influential economist, argued, “there is one and only one social responsibility of business; to…engage in activities designed to increase its profits.” This ‘mantra’ is now a subject of debate, on the one hand between economists and lawyers, and on the other, between executive management and shareholders.
Inquisitive brains are back in vogue, questioning the rationale for Friedman’s doctrine. The horizons of corporate leadership have opened beyond shareholder-value-thinking (SVT). The bar would be too low if SVT served as the sole measure of performance. The centre of gravity has rightfully shifted towards the creation and sustenance of the intention-fueled humanitarian principle of shared value. In progressive companies, the delicate balancing of the interests of employees, creditors and customers with wealth creation has assumed prominence. Liberal leaders with minds untrammeled by convention have embraced altruistic virtues and challenged the orthodox body politic.
While the political shift brings hope for change, it also places immense pressure on the new administration to deliver on its election promises in the face of serious economic challenges.On another level, newly appointed Finance Minister Ndaba Gaolathe’s grim assessment of the country’s finances adds urgency to the moment. The budget deficit, expected to be P8.7 billion, is now anticipated to be even higher due to underperforming diamond...