The Economics of Corporate Governance

1 CE Credit | 41-Page Paper

Dimensional, consistent with its fiduciary duties, seeks to promote good governance practices in its portfolio companies. But what is “good” governance? In this paper, we present different viewpoints about the ultimate aims of corporate governance. We then present evidence about how certain governance practices may improve shareholder value, thereby benefiting investors.

Learning Objectives

1. Understand the distinction between shareholder value maximization, shareholder welfarism, and stakeholder capitalism.

2. Understand what agency conflicts are, why they arise, and why addressing them is central to corporate governance.

3. Review the literature about how different governance mechanisms impact shareholder value.

4. Understand the implications for investment stewardship.

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