Shareholder Primacy

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Wikis > Shareholder Primacy

Definition

Shareholder primacy is a business theory that states that shareholder interests should be placed at a higher priority to all other corporate factors. Through this concept, shareholders are often given numerous powers in corporate decision-making, such as board election votes, or charter amendments. One large criticism of shareholder primacy is that it may sometimes go against Corporate Social Responsibility, where the benefits of the society are assigned first priority before the benefits of the shareholders. Shareholder primacy remains an ideology; there have never been legal requirements that companies must maximize their stock and shareholder wealth.

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