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Frank M. Werner and James A.F. Stoner

Over the past 50 years, the shareholder wealth maximization (SWM) paradigm has become the foundation of most finance theory and practice and is often cited as the basis of the success of the global economy. However, the contributions of SWM to global economic success have been questioned, and its pursuit has led to significant damage to the planet and its inhabitants. Recent research and experience suggest that a primary reason for the failures of SWM is that the assumptions upon which it is based are over-simplifications of reality or assume a world that no longer exists. As these assumptions are rethought and brought into alignment with today’s environmental and social needs, the SWM paradigm will likely evolve to explicitly incorporate sustainability.