Pickens Carried Friedman's Torch.

• Author: Tahmincioglu, Eva

Almost every story on the origins of corporate American's shareholder-centric approach includes a history lesson on economist Milton Friedman and his role in bolstering the concept that many believe has led to a short-term approach to company success, undermining innovation and employees.

Friedman's theory, however, was propelled by corporate raiders such as T. Boone Pickens, who died last month at the age of 91.

A few obituaries about the "aw-shucks" billionaire's corporate legacy included a few lines about how Pickens--who founded the United Shareholders Association in 1986--espoused the mantra that companies need to focus on the interest of the stockholders above all else.

Pickens, a Wall Street Journal op-ed reported, "became one of the leaders of the 1980s in advocating for the primacy of shareholder value as a benchmark for corporate management. As he pointed out, companies that don't serve the interests of their owners--the shareholders --are often serving the interests of managers who don't have the same stake in long-term success."

Alas, the "long-term success" he sought led to success for some, but not for so many others.

In a paper titled "The Toxic Side Effects of Shareholder Primacy," by Lynn Stout--the former professor of corporate and business law at Cornell Law School who died last year at age 60--she wrote:

... By the mid-1980s, many shareholders in public companies had become disillusioned. Some shareholders, such as corporate raiders Carl Icahn, T. Boone Pickens, and...