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Op-Ed: The Importance of Stakeholders to Profitability

This article originally appeared on National Review on August 31, 2021

August 19 marked the second anniversary of the Business Roundtable’s Statement on the Purpose of a Corporation, which stated that corporate management’s primary responsibility was no longer to their shareholders but rather to a group of “stakeholders” — including “customers, employees, suppliers, communities and,” last but perhaps not least, “shareholders.”

In a Wall Street Journal opinion piece denoting that anniversary, the director and associate director of Harvard Law School’s Program on Corporate Governance offered evidence that the 181 CEOs who signed the statement “didn’t intend to make any significant changes to how they do business.” Rather, companies were, for example, still aligning director compensation with the company’s stock price, sending “a clear signal that shareholder value is the objective directors are expected to pursue.”

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