William Thomas on How to Maximize Shareholder Wealth

Speaker A: Welcome to the Business Scholarship Podcast, a place for interdisciplinary conversations in the broad world of business research. My name is Andrew Jennings and it's my pleasure to be your host. If you like what you hear today, please subscribe to the podcast on Apple, Spotify or wherever you get your podcast, plus leave a rating and let other people know about the show too. And if you have ideas for the show, please let me know. My email address is andrewdrewkginnings.com and I look forward to hearing from you. All right, time for the episode.

Speaker B: Our guest today is William Thomas, Assistant professor of Business Law at the University of Michigan's Ross School of Business.

Speaker A: We'll be discussing his new paper, Stop

Speaker B: Trying to Maximize Shareholder wealth, like that, which I'll add a link to in the show. Notes for the episode will welcome to the Business Scholarship Podcast.

Speaker C: Thanks for having me.

Speaker B: Your paper's title opens with a term that lots of listeners are going to be familiar with, which is shareholder wealth maximization. I wonder if you could talk about shareholder wealth maximization, SWM as we might call it, as an abbreviation, if you could set up this concept for us, this policy that it embodies. And what role does the idea of shareholder wealth maximization play in corporate America or the way that we think about corporate law? And then perhaps in making this introduction, you talk about a paradox, and the paper is really all about this paradox that if we are self consciously as managers of a company, if we're self consciously trying to maximize shareholder wealth, we can actually by virtue of that attempt to maximize shareholder wealth, undermine our goal, our desire of maximizing wealth. So could you maybe set this all up for us and talk a little bit about the paradox that you play with in this paper?

Speaker C: Absolutely. Start with the definition of shareholder wealth maximization. Because in some respects the goal of this project is to challenge a common way we think about it. But I think maybe we can start with let's call it like a naive version of the idea. Core insight behind shareholder wealth maximization is that purpose of a corporation, of a for profit enterprise is to make money. And that is often understood to mean something like there's an obligation on corporate leaders, folks like board directors, executives, there's an obligation to create wealth, to create value for their shareholders. If we just take that basic idea, it is hard to overstate how ingrained it is in corporate law in finance, just in everyday business conversations, in many respects, the idea that the purpose of the corporation is wealth creation at the heart of at least American style capitalism. Now as to this idea that There's a sort of paradox lurking underneath that idea. I think one natural thought, if you hear that description of shareholder wealth maximization, is that if you're a corporate leader, you should be focused on creating wealth. You should be evaluating all your decisions according to, uh, which options are likely to be most profitable. You should take shareholder wealth maximization as the decision making procedure, the lens through which you run a corporation. And to get to the paradox, maybe it's good to start with an example here. Go back in time. Late 90s folks may not, depending on how old you are, you may not realize. But Apple at one point was teetering on the edge of bankruptcy. The directors could not figure out how to turn this company around. They throw up a Hail Mary and the Hail Mary is they bring back the founder slash ex CEO Steve Jobs. Now we of course know where this goes, right? Ten years later, Apple is one of the most valuable brands on the planet. Ten years after that, it's one of the most valuable companies. So what changed? It's interesting to look at Steve Jobs thought was going wrong. He was asked what happened to Apple? And he said, look at the beginning. We were focused on making the best computers in the world. And of course we were trying to make a profit because they needed the money to make the best computers. But Job said somewhere along the line we got those priorities flipped. The goal became to make a profit, and if that meant making good computers, you'd make good computers. And he said that switch, that focus on wealth creation stymied innovation. It undercut sort of our goals and mission, and over time it just led this enterprise to slowly collapse. That idea from Jobs, and frankly we've heard actually from lots of business leaders, is capturing this paradox that on the one hand we have a widespread belief and understanding that corporate leaders should be maximizing shareholder wealth. But on the other hand, relentlessly trying to maximize shareholder wealth is a pretty ineffective and sometimes maybe just counterproductive strategy for actually creating shareholder value. In which case, what is shareholder wealth maximization? What's it telling us to do? We square the theory with sort of the everyday reality of practice.

Speaker B: So one of the really interesting contributions you and, uh, a few others make to the legal academy and the business law academy is that you are a trained PhD philosopher. And so you bring the analytical tools and the concepts of philosophy into this field, which you do with aplomb in this paper. I want to maybe talk about those two distinctions that you talk about. You talk about deliberative shareholder wealth maximization as a decision procedure and then you also talk about criterial shareholder wealth maximization as what you call a standard of ripeness. Could you give us a little bit more in depth view of how those two perspectives on shareholder wealth maximization compare? What do they mean in practice? And then are there debates that philosophers have had over the years that might track on to those two distinctions between a procedure approach to wealth maximization and a criterial approach to wealth maximization?

Speaker C: Absolutely, you're right. I, uh, bring a particular debate to the conversation here. And that is because when I look at something like shareholder wealth maximization, at least as we've just described it, I think this is not the first time that we have had some kind of consequence maximizing theory, right? You swap out shareholder wealth for something like utility or happiness. And we're back with Jeremy Bentham and John Stuart Mill articulating ideas of consequentialism. And so in this project I wanted to try to leverage the lessons that philosophers have learned over the last two and a half centuries in trying to interpret consequentialist theories to maybe help get us right with shareholder wealth maximization. What you flagged are basically two different ways to dive down and interpret what exactly that high level description of shareholder wealth maximization actually entails. The first one mentioned is deliberative shareholder wealth maximization. And the way to understand a, uh, sort of deliberative interpretation of a theory is that the point of a consequence maximizing theory like shareholder wealth maximization, like utilitarianism, is to arm us with a framework, with a procedure for making the right decisions. In other words, deliberative shareholder wealth maximization is not just telling us what to maximize, it's telling us how to maximize. Right? It's offering a playbook to follow. We can discuss in a minute what I think is wrong with buying into that sort of deliberative framework. But let's put the alternative on the table first. The alternative, what I call criterial shareholder wealth m maximization that philosophers sometimes call a, uh, standard of rightness. The idea here is that consequence maximizing theories, they're telling us something important or uh, they're giving us a standard or a benchmark of success. But, and this is the crucial difference, providing a standard or criteria for success doesn't necessarily require also telling us how to follow any particular decision making procedure or approach. In other words, thinking of shareholder wealth maximization as a deliberative theory means that we're going to evaluate corporate success according to weather and um, to what extent the firm in fact produces shareholder value. But we don't really care how directors and officers go about producing that. Well, it doesn't say leaders have to focus on wealth creation or they have to run their decisions through the sort of wealth maximizing algorithm. Um, so the real difference between the sort of deliberative versus criterial approach is while they both agree on what should be maximized, only one of them takes the further step and says that there's a specific way to go about maximizing. And it's that second step that I want to suggest is contributing to the paradox that's undermining shareholder wealth maximization in practice.

Speaker B: In thinking about how this approach to shareholder wealth maximization might actually play out in practice, we have, I think, oftentimes in our minds when we talk about this subject, a model of the large public company in which we have a separation of ownership and control. Management runs the company. Disparate, somewhat anonymous shareholders own the company. Many other stakeholders have economic claims in the company as well. And so this question of how do we maximize wealth for the shareholders is fraught with agency costs and potential stakeholder conflict. But we can maybe think about this question in a more micro setting where we can assume away agency costs and that is the setting of the sole proprietorship. So I'd like to maybe test some of these distinctions with you, if you will, with kind of the owner manager firm where we have a sole proprietor, there's an identity between the corporate interest and the shareholder interest. Maybe I'm running a convenience store. Maybe I am, um, running a landscaping company. Maybe I'm running a law firm. Could you talk a little bit about how shareholder wealth maximization is going to work in that setting before we layer on this complex of fiduciary duties and business judgment rule, which I think we'll get to, and you talk about in the paper at larger concerns.

Speaker C: Absolutely. And I'm Andrew. I want to give credit where credit is due here. You were kind enough to look at a draft of this project when I was working on it, and you pushed me to explore these sole proprietor cases. And I think your description is right in some respects, corporate laws where we want to head. But corporate law is going to have a bunch of complications. So it's nice to take a really clean, simple example. The clean example I always think of is it's the classic mom and pop small business think your local barbershop, where POP is both the owner but also the operator of the enterprise. So if deliberative shareholder wealth maximization is the right way to think about what businesses do, then POP is getting up Every morning. And he's running the shop by asking himself, what can I do to make the shareholders, in this case he and mom, what can I do to make us as rich as possible? Now that's a fairly simple framework. There's going to be a lot of possible answers here, but that is how he's going to structure his day to day approach to the business. And what would it mean for him to succeed on that story? I think the deliberative story is going to say something like, look, we want to know, is Pop making decisions according to some kind of profit maximizing framework and is he doing a good job with it? In other words, is he picking investments, decision practices that are generally leading towards profit maximization? On the other hand, if you want to just take the criterial story, I think the criterial story is actually pretty easy to understand in this situation as well. And uh, what we're going to say is Pop is succeeding if at the end of the day, the barbershop is making money. And from the business perspective, right, his business is doing better if the shop is making more profit rather than less. So if you're a criteria list on this story, you don't need to qualify that evaluation by saying something like, the shop is running great. But what was Pop thinking? What was he deliberating upon when he was running things? Was he focused on making him and mom rich? In which case, according to the deliberative story, he's doing it right, or was he focused on something else, cultivating his craft or making a good sort of community for his customers? One story is going to require us to investigate or at least hypothesize why Pop was making the decisions he was making and was he making them for the right reasons. The other story is more interested just in end results. The reasons for the decision. They might help explain the results, but they're not necessarily built into the theory itself.

Speaker B: With that simplifying explanation in place, you talk in the paper about why the deliberative approach might be self defeating. You talked about certain pathologies that it has. Could you walk us through why a deliberative approach to shareholder wealth maximization might actually end up not maximizing shareholder wealth? Why might that be? And there are a couple of examples that you use as illustrations in the paper. Some of them somewhat more recent and in the headlines and others ripped from the early pages of the casebook. Maybe if you could just walk us through a couple of those examples to illustrate this idea of the deliberative approach having pathologies that will undermine its Effectiveness or undermine the goals that it sets out to achieve.

Speaker C: Yeah, I try to focus on really three big types of pathologies that are endemic not just to, uh, shareholder wealth maximization, but to consequential theories more broadly. And the idea here is I want to kind of sidestep the question of is shareable wealth maximization? Is this good? Should we care about creating wealth or value? Really, what I want to say and what these pathologies are aimed at is if we assume that wealth creation is in fact the standard of success in corporate America, treating shareholder wealth maximization as a decision making approach is going to be self funded money. It's going to fail at its own goal. So you can stick with Pop for at least one of these. And this is a classic problem that philosophers have known about for a long time. You can call it the maximizer's paradox. Pop gets up in the morning. He knows he needs to make the business as great as possible. What should he do next? And if you really want to take that obligation as seriously as possible, if all decisions are being filtered through what is going to produce the most value for shareholders, Pop is going to be stuck in decision paralysis. And he might have two or three ideas in front of him. Maybe I'm going to increase the number of customers, maybe I'm going to hire a new barber, maybe I'm going to go to the gym and improve my health so that I can maintain the business longer. And of course you can just keep evaluating these options over and over again. There's always another option that might be more value inducing. And so Pop is going to find himself cycling on this problem of if I really want to do the thing that actually maximizes, all of a sudden I can't make any decisions. In the first instance, this sounds like a sort of silly problem. And oftentimes we think good enough is good enough. And the problem with a maximizing theory is the theory doesn't really allow us to short circuit its own process. In other words, you can't just say, I'm going to maximize profits when it matters, but the rest of the time I'm just going to pick the good enough option. Why can't you do that? Precisely because the theory doesn't give you an answer to which pathway you're on. So this is a long standing, seemingly almost silly theoretical example, but it just turns out to be more and more pervasive than people appreciate. Now there's, I think, more grounded problems, more grounded pathologies that we've seen in the past. And this gets a Little bit to some of the case law. So maybe what we should do is we should jump to one of the most famous corporate law cases of all time. This is Dodge vs Ford. And Dodge vs Ford is an interesting case. I'm not going to give the full detail, but I'll try and give a quick summary. But the reason I want to talk about this case is because speaks to a particular kind of pathology that I, that uh, we might call alienation. And here's the basic thought. I can't tell you what makes for a good life, but I'm pretty sure meaningful relationships with friends, with families, with your partner, that's a big part of it. And I think that's true in the business context as well. Building relationships is a fundamental feature of any successful business. And Dodd versus Ford is a good example of how taking shareholder wealth maximization really seriously interferes with our ability to, to build the kinds of relationships that are essential for success. If you don't know the case, don't remember. Here's the basic rundown. This is early 20th century. Henry Ford is a major shareholder. He's still the key force behind the Ford Motor Company which by the way is running gangbusters. It's making huge profits. Ford decides to take those profits, reinvest them in the company, both by undertaking some more R and D style investments, but also by essentially rewarding his workforce. Other shareholders come along, the Dodge brothers, Dodge brothers sue. They say, in essence, Ford, you have a duty to maximize the value for shareholders like us. In harsh as it sounds, you can't pay workers more money unless you leave us, the shareholders with less money. So you're violating shareholder wealth maximization. Now as, um, I'm carving off a lot of details in this case, but it is a case that's famous for being the first modern statement of this idea of shareholder wealth maximization. Supreme Court of Michigan is going to agree basically with the Dodge brothers. Ford is out there in public on the stand saying he cares more about paying workers than he does about enriching shareholders. And the court is going to say no, that is a breach of your duty to maximize shareholder wealth. So what does this story, what does this case have to do with what I just described as alienation? Look, reinforcement. Paying employees above market wages can be a good long term business strategy. That's not the problem all by itself. We also know that when employees feel valued, they end up being better employees. That's part of paying them above market ranges. But Dodge versus Ford kind of leaves us in this really awkward place. Henry Ford could have paid his employees more money as long as he convinced the court that he wasn't really doing it for the employees. He was doing it for purely instrumental reasons. And if you step out of the business context and you just think about any relationship in your life, you can't really have instrumental relationships. And if you don't believe me, try going home and explaining to your partner that the reason you're so nice and loving and supportive of them is because you want to lead the happiest life possible. And you figure being nice to them is going to make you happier. That is not a recipe for a successful relationship. And that's true with employees as well. You have this situation where Henry Ford is not allowed to actually care about his employees. At ah, best he can only pretend to care about his employees. But chances are actually caring about your employees is in fact more likely to produce value than merely pretending or not caring at all. And um, this is one example of a kind of alienation that I think deliberative shareholder wealth maximization invites in our corporate discourse. And maybe, if you don't mind, I might just add one more example here, because what I just described there is a way in which we're alienating corporate leaders from members of the corporation. I think the theory also alienates corporate leaders even from shareholders, because it doesn't actually let them care what the shareholders care about. It just says shareholder wealth. But the one that in some respects gets us back to Steve Jobs in treating shareholder wealth maximization as this deliberative process actually alienates corporate leaders from us and us from them. So one thing I find a little remarkable, and you'll see this in lay coverage but also academic literature, is that anytime a corporate leader, Steve Jobs, or someone else gets up and says something like, I care about making the best computers or I'm focused on, um, creating the best company for my employees, you see this near reflexive tendency to redescribe what they are saying in terms of profit maximization. In other words, they're really saying is I care about those things because that is good for the shareholders. And I want to suggest that if our first instinct is to treat corporate leaders as, uh, myopic, near psychotic profit maximizers, maybe we shouldn't be surprised when that's what we get. You might remember Martin Shkreli. This was the infamous pharma bro from several years ago. His business model involved buying up firms that produce orphan drugs. These are drugs of life saving importance only for a small group of people. So Shkreli would buy up the only company producing these drugs and then dramatically jack up the price because he knew consumer demand to stay alive is basically inelastic. And Shkreli defended himself, saying, I am required to do what I did because of this theory of shareholder wealth maximization. It says I have to make decisions based on what is best for the shareholders. And clearly what I did produced a lot of value for him. Arguing the piece, I think Shkley is factually incorrect. I don't think the law actually imposed any kind of obligation on him in the way he's describing. But moreover, I don't think any of us should want to think that Shkreli should have done what he did. We all think he did something morally objectionable. And if there's a version of shareholder wealth maximization that makes Shkreli right, that fact would be reason to think maybe that version of shareholder wealth maximization is probably wrong. And I think he is describing a version that looks very much like the deliberative shareholder wealth maximization that I want to push back on.

Speaker B: That takes us to the doorstep of law. We've been talking at, uh, the level of philosophy and management strategy so far in this conversation, but you've taken us up to what the law requires or allows. In this paper, you make the case that the criterial approach to shareholder wealth maximization can help us make better sense of, let's say, Delaware corporate law, and maybe with some extensions to, uh, other states as well, where we have certain standards for how boards and managers make business decisions. Most of the time we have a very deferential business judgment rule. In certain settings, the standard is heightened, as in the Unocal and Revlon lands. I wonder if you could talk to us a little bit about how this paper teaches us to make better sense of Delaware law. And perhaps some of these rules around business judgment, around the unical and Revlon standards, maybe look different when we drop an assumption that shareholder wealth maximization requires a certain form of deliberation.

Speaker C: I love getting some of the weed in corporate law. And you're right, we'll stick with Delaware just because that gives us a nice case study. Within Delaware corporate law. There's this, what I think is a sort of interesting legal phenomenon. Um, and that is the idea of shareholder welcome exposition is always lurking in the background, and yet it never quite seems to be at the forefront. So for somebody who is versed in the scholarship in this area, you will know that, essentially a cottage literature debating whether or not the Delaware courts have in fact endorsed shareholder wealth maximization or Whether they've left open the possibility that some other theory applies. And that, uh, just speaks to the fact that most of the time Delaware courts are not directly articulating a shareholder wealth maximization rule. And yet we can see echoes of this profit maximizing approach sitting in structural features of corporate law in the background. How do we make sense what's going on here? What I want to suggest is if shareholder wealth maximization is in fact providing us, uh, some kind of decision making procedure, it's telling directors what to do, then we have a bit of a problem with Delaware law. And that is because in Delaware law we have a handful of situations where courts have in fact specified some approach that directors must follow. This is most common in the takeover situations. Iconic, uh, cases here are Revlon and Unocow. We can talk about the details of those cases, but those are two cases where courts have given at least some instruction to directors of this is what you should do, this is how to make decisions. Meanwhile, almost all the rest of the time we have the business judgment rule. The business judgment rule is extremely solicitous of boards and officers. It says, in essence, as long as we have evidence that you have exercised your business judgment, we, the courts are not going to second guess your decisions. So if we put these in a line, what we have is a series of judicial practices that say lots of the time we are not going to investigate why you're making decisions at all. And then in a handful of circumstances, we are going to investigate. And oh, by the way, when courts investigate decision making procedures in cases like Revlon and Unocal, they don't follow a clear statement of deliberative shareholder wealth maximization. And in fact they seem to follow almost contradictory rules. So when we are talking about a case like Revlon, Revlon is one of the few circumstances where the court seems to restly clearly articulate a shareholder wealth maximization rule. When we are in Revlon land, directors have an obligation to get the best value for shareholders. They're not supposed to be considering anything else. By contrast, when we're in Unocal, when the board is trying to fend off, uh, say a hostile takeover there, Delaware has said you got to look to the interests of shareholders, but you can also look to the interests of stakeholders of the corporate culture, the long term goals of the enterprise. So that means that most of the time Delaware is not speaking to what decisions Borg be making at all. And when it does speak to that question, it's giving different answers in different circumstances, neither of which perfectly line up with the dilibid shareholder wealth maximization story. What I want to say is all of this makes sense if we understand shareholder wealth maximization as a standard of success rather than a deliberative procedure. It would make sense that in general, Delaware is not going to impose any kind of decision making procedure on boards, not because they lack expertise or they can't make, they lack business judgment, but rather because there just is no one procedure for generating wealth. The whole point of criterial shareholder wealth maximization is to say we leave open exactly how you want to get to the target. And so the fact that the business judgment rule so essential to Delaware case law is, I would argue, a reflection of the underlying commitment to a criterial approach to shareholder wealth maximization, that the purpose is to make a profit. And it is not the role of courts or anyone else to tell boards how they have to do that, except maybe in circumstances like Unocal, like Revlon. As we all know, those cases are important because they are the situation where boards are deeply conflicted. We are acutely concerned of systemic self dealing or self enrichment. And so it's not surprising that might be a circumstance where there's a short time horizon, big pressure, lots of conflict. And maybe courts are going to say, most of the time we leave to you the decision making process. But in these circumstances it is not enough for us to say your target is to make money. We are also going to say to stay in compliance with your fiduciary obligations. There's only a handful of procedures that you can follow and here's what they are. In other words, if we step back, to me, the paradox or the interesting future of Delaware is not that we had these cases saying seemingly inconsistent things about what directors should do. The interesting thing about Delaware is that we have a handful of cases where uh, courts are telling directors to do anything specific at all. And that can be explained if we take on a criterion story.

Speaker B: One of the century long debates in corporate law is between a shareholder centric and a stakeholder centric view of corporate governance and corporate purpose. Are we governing the corporation for the benefit of the shareholders? Is that our purpose? Or do we have a broader purpose of bringing in non shareholder stakeholders as well employees, customers, communities, etc. Does this paper and the criterial view that it advances offer us any resolution or teachings for that very long and probably interminable corporate purpose debate?

Speaker C: Yeah, and I want to be a little careful here for the following reason. The debates around shareholders versus stakeholders, around corporate purpose has a a lot of different dimensions. As you're suggesting, I do think we can make a little bit of progress, at least on, um, one aspect of the debate in the way that corporate lawyers specifically do. And that is, as you just suggested, is the purpose of the corporation to create wealth for shareholders? That's the sort of shareholder wealth maximization view. Or is the purpose of the corporation to serve broader interests, the interest of stakeholders, which might include employees, creditors, local community, lots of parties? One thing to notice here, there's a move that the shareholder folks want to make that I think both sides have agreed is a. It's a really good argument. And the move is this. I say the best thing about a shareholder wealth maximizing rule is that it's simple. It provides accountability. There's exactly one target and one constituency, the shareholders. By the way, those shareholders have legal rights. They can go in force to make sure the directors are doing the right thing. That is going to ensure that the corporation is being run without abuse, self enrichment, corruption, et cetera. By contrast, the argument goes, the stakeholder story is all over the place. If the board is serving the interest of everybody, that's a way of saying the board is serving the interest of nobody. And so the nice thing about shareholder wealth maximization gives us a clear organizing principle and decision making procedure. Yes, that does mean we're ignoring stakeholders, but the trade off is worth it. There's something to this argument. On the other hand, what I want to push back on is to say that argument is assuming the decision making procedure, assuming the deliberative story about Sheriff for Welfare is correct. But the point of the paper is to suggest there's a lot of reasons to think that decision making procedure is blahed from the get go. In other words, it's not just hard to follow a deliberative approach, it is counterproductive, alienating, self defeating. So if we take that on board, suddenly the argument against the stakeholder group doesn't seem quite as compelling because now what we have is we have one side with no clear decision making rule and the other side with a fundamentally flawed decision making rule. And that's a lot less clear sort of trade off. So that's a little bit of a knock on the shareholder story, but actually I think we can take the criterial story as a way to strengthen shareholder wealth maximization by defusing the stakeholder critic. Remember, criterial shareholder wealth maximization says here's the benchmark for success. You figure out how you want to get there. Figuring out how you want to get there does not prevent Henry Ford from focusing on his employees. Does not prevent Steve Jobs from focusing on making the best computer. In other words, it creates space for directors to care about stakeholders and not just care about them instrumentally, actually care about them, because they think that is what matters. And we will evaluate them according to whether they ended up creating wealth for their shareholders. If we take on board the criterial story, I think a lot of the underlying debate and tension between shareholder and stakeholder visions of corporate purpose end up dissolving away. And in fact, there's much less dispute than we've often taken there to be.

Speaker B: I'd like to close, as I often do on the show, with a, uh, takeaways question, but I'd like to maybe this time invite you to target your takeaways to two audiences, audiences who will soon, with the fall semester, be approaching, be confronting some of the issues that we've talked about in business associations courses and other business law courses at law and business schools. So I might invite you to offer your takeaways for students of corporate and business law. And what takeaways do you have for their teachers?

Speaker C: For the teachers, my hope is this account of chef for wealth maximization can actually can advantage your teaching of law. And the reason is I certainly remember being a student and struggling to put together and make sense of all of these seemingly inconsistent, maybe even contradictory doctrines around unical, around revlon, around business judgment generally. I think the criterial story gives us a cleaner account of how these various pieces all fit together. So in addition to understanding each individual doctrine, criteria story about shareholder wealth maximization can help bring a broader coherence to what is going on in Morbert law. I think that is to me, a potential takeaway for the teacher. I hope that it makes it a little bit easier to get this broader conversation across to an audience, to students, I could make the same point. But maybe what I want to say to students is an important move in this paper and really just I think in legal scholarship generally is digging down into broad general claim and figuring out the structure of the argument and different ways to parse and interpret an argument. I think of arguments a little bit of the way I think of vocabulary. You hear a new word, you learn the definition, and suddenly you see it everywhere. And I think the same is true here. Once you start to appreciate the distinction between two kinds of theories, a criteria theory versus a deliberative theory, you're going to see this pop up not just in the context of shareholder wealth maximization, but I think you're actually going to see it popping up in a variety of different debates in the corporate sphere, and frankly, you can see this in other interpretive practices in other classes in law school. So as a student getting clear on what exactly the general proposition might entail, what are the potential moves on the table, what are different ways to understand it, is going to sharpen how you interpret not just corporate law, but sort of any kind of legal doctrine growth. Hopefully this is a new move for you to be able to notice out there in the world. And I think once once you have it in hand, you're going to see this distinction pops up more often than you would be appreciated.

Speaker B: Our guest today has been William Thomas, Assistant professor of Business Law at the University of Michigan's Ross School of Business. We've discussed his new paper, Stop Trying to Maximize Shareholder Wealth. Like that. I'll include a link to the article in the show notes for the episode Will thank you for joining the Business

Speaker C: Scholarship Podcast and thanks so much for having me. I look forward to doing it sometime in the future.

Speaker A: Thank you for listening to another episode of the Business Scholarship Podcast. If you like what you heard today, be sure to subscribe to the podcast on Apple, Spotify, or wherever you get your podcasts. Rate the show and let other people people know about it too. If you have ideas for future episodes, let me know. My email address is andrewdrewkjinings.com and I look forward to hearing from you until the next time. I'm your host, Andrew Jennings.