The Shareholder Primacy Doctrine

The Shareholder Primacy Doctrine is a principle in corporate governance that emphasizes that a company's primary obligation is to maximize value for its shareholders, who are the owners of the company. This means decision-making is focused on increasing profits and stock prices, with the interests of shareholders taking precedence over other stakeholders like employees, customers, or the community. While companies may consider other factors, the main goal under this doctrine is to deliver the best financial returns to shareholders, aligning management’s interests with those of the ownership.