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New research suggests that businesses lose out on billions of pounds for one reason: they lack purpose. Fragmented shareholders and compensation contracts based on maximising profits in the short term, prevent companies from making more capital. 


Organisations have become ownerless and have lost sight of the purpose of finance – a trend borne out by a financial system that often fails. In Britain and elsewhere, excessive and hidden costs, poorly designed institutions and ill-conceived regulation, hit people’s savings. And it’s not always easy for consumers to understand and access the best financial products for them. 


Rediscovering the purpose of finance is essential to addressing the issues affecting organisations and consumers. Our faculty believe shareholder activism where stakeholders help clarify and support the company’s vision can lead to success. Their research also highlights a need to reform financial systems, by making fees for consumers completely transparent, revamping governance and simplifying regulation.

The purposeful company


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This report by a taskforce of FTSE CEOs, investment houses, leading business schools and business consultancy firms was established by Big Innovation Centre and supported by the Bank of England. It reveals that fragmented shareholder bases, compensation contracts based on short-term profit maximisation, and disclosure policies that emphasize the quantitative at the expense of the qualitative, are holding back companies from creating greater economic and societal value. The report is co-authored by LBS Professor of Finance, Alex Edmans.

What they do with your money


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Lack of transparency, complexity and excess regulation mean financial services are no more productive than they were 130 years ago – but that could be fixed, two London Business School experts believe.

Faculty thought leadership articles and commentary


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Clear purpose could add £130bn a year to British firm values


Report by Professor Alex Edmans finds fragmented shareholders and short termism hold us back.

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Will fintech make the world a better place?


Finance has always been an energetic early adopter of information technology, but now one expert from London Business School is asking whether fintech will reach places earlier technological innovation didn’t touch.

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The death of the public corporation


30 years ago, the Harvard Business School professor, Michael Jensen, wrote an article predicting “the eclipse of the public corporation”. It has happened.

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Profitable ways of looking at the balance sheet


Investors struggle to assess expenditure on ideas, patents, software, corporate culture and brand strength.

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Why capitalism needs a reboot


Due to a maze of intermediaries between wealth-creating citizens and the assets they own, corporations have been divorced from their duty.

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Bonfire of the nest eggs


High charges, hidden fees and poor design mean that a British saver will end up with less in their pension pot compared to a Dutch saver.

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Has the finance industry lost its purpose?


The finance industry was founded in response to customer need but has morphed into a self-serving behemoth, says David Pitt-Watson.

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The future of finance

Global finance faces some major shifts driven by the fintech revolution, Brexit and Eurozone debt. Our faculty produce cutting-edge analysis on the finance industry’s hottest topics:

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Masters in Finance

Fast-track your career with this highly specialist, technical masters for experienced professionals.

The LBS Masters in Finance programme now includes a core course on the purpose of finance.

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