Ericson, Keith Marzilli. <br/><br/>
What Do Shareholders Want? Consumer Welfare and the Objective of the Firm / 
Keith Marzilli Ericson. 
 - Cambridge, Mass.  National Bureau of Economic Research  2024. 
 - 1 online resource:  illustrations (black and white); 
 - NBER working paper series  no. w32064 .
 - Working Paper Series (National Bureau of Economic Research)  no. w32064. .
<br/><br/> January 2024. 
<br/><br/> Shareholders want a firm's objective function to place some weight on consumer welfare, motivated by both self-interested and altruistic motivations. Firms have a unique technology for improving consumer welfare: lowering inefficient price markups, which increases consumer welfare more than it lowers profits. Optimal pricing formulas can be adapted to account for shareholders' marginal rate of substitution between profits and consumer welfare. Calibrations from preference parameters show many shareholders should place non-trivial weights on consumer welfare.  A survey experiment on a representative sample elicits how shareholders would vote on resolutions giving strategic guidance to firms on what objective to pursue. Only 7% would vote for pure profit maximization. The median individual is indifferent between $0.44 in profits or $1 in consumer surplus, with those owning stocks preferring a lower weight on consumer welfare than non-stockholders. 
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<br/><br/><label>Subjects--Topical Terms: </label><br/>Firm Behavior: Theory<br/>Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making<br/>General<br/>Business Objectives of the Firm<br/>Corporate Culture &bull; Diversity &bull; Social Responsibility