abstract
- Theoretical work prior to John Maynard Keynes generally assumed that the future was certain. Ownership and control could, thus, be treated as one, and value maximization and utility maximization produced identical investment decisions. With the future uncertain, neither of these propositions is likely to be true. Corporations serve portfolio investors by maximizing share value because investors are able to achieve the goal of long-run survival on personal account. However, the persons who control firms find it in their interest not to maximize value but to maximize the probability of the firm's long-run growth survival. This policy may also be in the interest of the public at large. Copyright 1991 by Oxford University Press.