Teaching finance for responsible management

Abstract

The dominant shareholder value paradigm in academic finance is a major obstacle to responsible management. The methodology for responsible management education identifies three aspects to address: building sustainability knowledge, incorporating sustainability in an integrated way, and developing practical applications. Applying this methodology to academic finance education, and based on our own teaching experience, we propose three shifts to the current approach. First, courses should start with sustainable development as the goal, i.e. finance as a means instead of finance for the sake of shareholder value maximisation. Second, courses should offer an alternative perspective to shareholder value, not just slight modifications. We suggest using the integrated value paradigm, which estimates not only financial value, but also social and environmental value, which tends to be an eye-opener to students. Third, practical learning tools could enhance the interdisciplinary learning experience of students. To achieve these shifts, business schools need to show leadership with the right tone and incentives from the top.