Editing Shareholder value (section)

==Alternatives==
While shareholder value is the most common framework for measuring a company's success and financial viability, a number of alternatives have been proposed. Indeed, maximizing shareholder value is not always the goal of successful companies.

===Stakeholder value===
The broad idea of "stakeholder value" is the most common basis of alternative frameworks. The intrinsic or extrinsic worth of a business measured by a combination of financial success, usefulness to society, and satisfaction of employees, the priorities determined by the makeup of the individuals and entities that together own the shares and direct the company. This is sometimes referred to as stakeholder value. Stakeholder value heavily relies on [[corporate social responsibility]] and long-term financial stability as a core business strategy.<ref name="Griaud et al"/> Academic Pete Thomas outlines one response which sees the idea of stakeholder management as "a dangerous and illegitimate challenge to shareholder interests".<ref>Thomas, P., "Stakeholders and Strategic Management: The Misappropriation of Discourse", Critical Management Studies Conference, 14–16 July 1999, p. 2</ref>

The stakeholder value model is prevalent in regions where [[limited liability]] laws are not strong.{{examples|date=August 2024}} Some companies, choosing to prioritize social responsibility, elect to prioritize the social and financial welfare of employees and suppliers over shareholders; this, in turn, shields shareholders, the owners of the company, from liability when the law would not be lenient should the company engage in poor behavior.<ref name="Griaud et al">{{Cite web|url=http://www.essec.edu/faculty/showDeclFileRes.do?declId=10089&key=__workpaper__|archiveurl=https://web.archive.org/web/20150713130814/http://www.essec.edu/faculty/showDeclFileRes.do?declId=10089&key=__workpaper__|url-status=dead|title=In Search of an alternative to Shareholder Value Maximization|archivedate=July 13, 2015}}</ref>

Despite its high potential social benefit, this concept is difficult to implement in practice because of the difficulty of determining equivalent measures for usefulness to society and satisfaction of employees. For instance, how much additional "usefulness to society" should shareholders expect if they were to give up $100 million in shareholder return? In response to this criticism, defenders of the stakeholder value concept argue that employee satisfaction and usefulness to society will ultimately translate into shareholder value.

Another related criticism is that it is difficult to determine how to equitably distribute value to stakeholders. The question of "who deserves what and how much" is a difficult one to answer.

===Social enterprise===
{{Main|Social enterprise}}
A company may choose to disregard shareholders completely. A [[social enterprise]] instead focuses its objectives on goals other than the profitability of its owners; indeed, the constitution of a social enterprise often precludes issuing dividends to shareholders. Social enterprises require significant investment in financial stability and long-term profitability, in the meantime taking very little risk.<ref name="Griaud et al"/>

Social enterprises manifest themselves in the UK as [[community interest company|community interest companies]] or [[Private company limited by guarantee|limited by guarantee]]. In the United States, California allows companies to incorporate as [[flexible purpose corporation]]s.<ref name="Griaud et al"/>