The idea that companies exist solely to produce shareholder value can be traced to a 1970 editorial by Milton Friedman.
Not really. The classic example cited for the shareholder primacy norm dates to 1919, when the Michigan Supreme Court held that it was illegal for Ford Motor Company to pay its workers guaranteed wages and benefits, when the money spent on the proposed entitlements could instead be used to pay a dividend to shareholders (in this case, the Dodge brothers, who were minority shareholders of Ford). “a business corporation is organized and carried on primarily for the the profit of the stockholders. The powers of the directors are to be employed to that end.” Dodge v. Ford, 204 Mich. 459, 170 N.W. 668. (Mich. 1919) (wikipedia summary).
Many have argued against using Dodge v. Ford for this precedent. The above quote was merely dicta, probably overreaching dicta at that, and Ford at the time was not a publicly-traded corporation, but a closely-held company.
Nevertheless, the case is frequently cited as establishing shareholder primacy, and is clear evidence that the idea is is closer to 100 years old than it is to 40.
I’ve no doubt that Friedman picked it up and ran with it, as served his interests.
