CORPORATE IRRESPONSIBILITY: America's Newest Export

In the not-too-distant past, corporations served three constituencies in a fairly equal way—stockholders, employees and customers. That paradigm, Mitchell argues quite persuasively, has given way to one overriding goal: profit maximization and the creation of greater shareholder wealth. According to Mitchell, the laserlike focus on short-term profits instead of long-term sustainable growth causes corporate managers to abandon concerns for employees, customers, the environment and society at large to ensure that their company meets its quarterly profit targets, which will keep stock prices rising. Mitchell, a law professor at George Washington University, further argues that managers are forced to place profit maximization above all else, not out of personal greed, but because of the legal structure of modern corporations. To once again make corporations more accountable, Mitchell offers a number of suggestions, including extending corporate directors' terms, requiring companies to disclose figures on a yearly rather than quarterly basis and, in his most original proposal, changing accounting methods to treat employees as assets rather than liabilities. This is an important, provocative book that is sure to stir debate between groups who advocate the need for more corporate accountability and those who see nothing wrong with the status quo. (Jan.)