Managers Should Satisfy Only the Ethically Permissible Preferences of Shareholders — Santiago Mejia

The amendment I am proposing—namely, that executives should only maximize the ethically permissible preferences of shareholders—would not be necessary if shareholders’ preferences and values were ethically permissible. However, it is mistaken to assume that this will always be the case. Some shareholders may be immoral or their self-interest may cloud their ethical judgments.

The current view has been, if it is legal, it is ethical. This is defended by the view that government should not be the arbiter of morality in a liberal state. This leads to various paradoxes of liberalism, where social, political and economic liberalism come into conflict.

ProMarket — The blog of the Stigler Center at the University of Chicago Booth School of Business
Managers Should Satisfy Only the Ethically Permissible Preferences of Shareholders
Santiago Mejia | assistant professor of business ethics at the Gabelli School of Business, Fordham University