NEGATIVE EXTERNALITIES OF SHAREHOLDER VALUE ORIENTATION AND ITS IMPACT ON GLOBAL FINANCIALIZATION

Abstract

Value-based management (VBM), also often known as and connected to shareholder value (SHV), is the most popular management paradigm of the 21st century. This concept, despite bringing many improvements to companies, has opened the door to a discussion of its negative overall economic effects, especially regarding its impact on the strengthening of the financial sector. The main hypothesis states that SHV orientation is a financialization accelerator – it contributes to the increase in the size and importance of a country’s financial sector relative to other parts of the economy. The study was based on a comprehensive analysis of the literature on the subject. The research method involves a theory-synthesis and general desk research, based on integrative review. Performed studies confirmed the main hypothesis and reveal that an SHV mindset contributes to the increase of global financialization. It is caused, among others, by reinterpretation of the original assumptions, which has paved the way for further, unsustainable corporate practices.