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47 J. Corp. L. 435 (2021-2022)
From Managers to Markets: Valuation and Shareholder Wealth Maximization

handle is hein.journals/jcorl47 and id is 461 raw text is: From Managers to Markets: Valuation and Shareholder Wealth Maximization James J. Park* I. INTRODUCTION ....................................................................................................... 436 II. THE MANAGERIALIST CORPORATION ......................................................................... 441 A. Internal Capital Markets and Professional Managers...................................... 442 B. Managerialism and Corporate Purpose ........................................................... 446 III. THE INCOMPLETE EXPLANATIONS FOR THE TRANSITION TO SHAREHOLDER WEALTH MAXIMIZATION ...................................................................................... 450 A. Law ..................................................................................................................450 B. Ideology........................................................................................................... 452 C. Executive Compensation ................................................................................. 455 D . Institutional Investors ..................................................................................... 455 IV. THE PROBLEM OF VALUING FUTURE EARNINGS ....................................................... 457 A. The Shift to Assessing Earnings ...................................................................... 457 B. The Problem of Predicting Earnings .............................................................. 459 V. SIGNALING FUTURE EARNINGS .................................................................................. 461 A. Conglomerates ................................................................................................ 462 B. Projections ...................................................................................................... 464 1. Internal Projections.................................................................................... 464 2. Market Projections ..................................................................................... 468 i. From Internal to External Projections.................................................... 468 ii. Insider Trading Law and the Increasing Importance of Projections ...... 472 VI. VALUATION AND CORPORATE PURPOSE ................................................................... 476 A. Projections and Agency Costs ......................................................................... 477 B. The New Managerialism? ............................................................................... 481 VII. CONCLUSION ........................................................................................................... 485 * Professor of Law, UCLA School of Law. Thank you to Ofer Eldar, Andrew Verstein, Harwell Wells, and participants at the Trans-Pacific Business Law Dialogue and Yale Law, Economics & Organization seminar for helpful comments. Thank you to Jaime Maier for excellent research assistance.

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