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Karl W. Smith

Corporations Can Shun Shareholders, But Not Profits

The best way for corporate America to benefit society is to keep focused on the bottom line.

Stakeholder activism.

Stakeholder activism.

Photographer: Christof Koepsel/Getty Images Europe

Jamie Dimon says he intends to move beyond the staid maxim that corporations should act to maximize shareholder value, and he has persuaded 180 of his fellow CEOs to join him. They propose a new ethos in which corporations such as JP Morgan Chase & Co. will be accountable to all stakeholders — including not only employees, customers and shareholders, but also society at large.

It certainly sounds enlightened — and if Dimon’s goal is merely to sound enlightened and thereby improve JP Morgan’s image, then his move is a smart one. If, however, he genuinely means what he says, then his proposal is misguided. Its implementation will be at best wasteful and at worst harmful to investors, workers and society.