ABSTRACT
The sharpest point of the advance of Anglo-Saxon modes of corporate governance is the principle of shareholder value as the central objective of corporations. Technically shareholder value is the capacity of the fi rm to generate value by achieving a cash return greater than the cost of capital itself. However, what is contentious is fi rst the methods employed to generate this shareholder value, often short-term reduction of costs, sometimes directed at investments essential for the future, such as research and development, or employment and training. Second is the impact of an excessive focus on one fi nancial indicator, potentially leading to a relative neglect on product quality or customer satisfaction for example. Finally there is the objection to the assumption that all value created is essentially for the shareholders, again potentially limiting the capacity to invest in the development and growth of the company. Ultimately the direction of the development of corporate governance in Europe will be determined by the extent to which shareholder value orientations and their accompanying managerial practices take hold.
