A Review of the Two Main Competing Models of Corporate Governance: The Shareholdership Model Versus the Stakeholdership Model (original) (raw)
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European Journal of Business and Economics
Corporate governance (CG) has emerged as one of the most recognized areas for researchers, academics, practitioner, and regulators over the last few decades. This paper will initially present an epigrammatic overview on key developments in corporate governance along with the intellectual foundations of the ‘shareholder versus stakeholder’ argument. Additionally, this study tries to analyze the contemporary shift in the perception of corporations from the shareholders wealth maximization to stakeholder’s valuation. It has been noticed that investigating cross country and firm based variances in wealth distribution between diverse interest groups is likely to continue as major focus for CG study. It has been experienced that the nature of the corporation is changing around the globe, Big multinationals have been splitting into smaller liberated corporation, access to capital market is become easier and physical resources are easily replaceable and less exclusive to business strategy t...
Stakeholders vs. shareholders in corporate governance
2007
Abstract: The paper is divided in two coordinate parts. The first considers in general the issue of stockholders vs. stakeholders oriented governance systems and their relative merits and demerits. The second part deals specifically with the issue of the principal-agent problem in a stakeholder context.
CORPORATE GOVERNANCE: SHAREHOLDERS' INTERESTS' AND OTHER STAKEHOLDERS' INTERESTS
Much of the traditional Company Law doctrine considers that Corporations must be managed to promote, above all, shareholders' rights. Activities in favour of non-shareholder constituencies such as suppliers, consumers, employees or the Community at large can be perceived as a means of Management to increase its power and personal prestige. Stakeholders' interests can be interpreted as opposing Shareholders rights to obtain fair revenue for their investment. In this paper, we argue that Shareholders and Stakeholders interests are compatible and both contribute to corporate long term efficiency and progress. It is further argued that it is essential to achieve a wide consensus on how to control Management actions in support of Stakeholders interests
Corporate Governance and Protection of Stakeholders Rights and Interests
Beijing Law Review, 2020
The paper takes a holistic view of corporate governance (CG) and protection of stakeholders' rights and interests. It analyzes whether effective boards of directors in addressing shareholders' interests prove to be effective in guaranteeing the interests of the rest of the firm's stakeholders. It discusses how corporate governance should be shaped in relation to existing firms, according in particular to some subjective criteria of fairness and fair play. It defines CG and explains the concept by stating its principles and codes as contained in the Organization for Economic Cooperation and Development (OECD). It states that countries such as Nigeria, the United States and the United Kingdom have developed their CG principles with corporate social responsibility (CSR) intent by using as a guideline the OECD principles and other sources of rules and principles of CG which includes the Companies and Allied Matters Act, Investment and Securities Act and a host of others. It states that the concept of CG applies to corporate businesses across the globe by highlighting the importance and specifying the distribution of rights and responsibilities among various corporate stakeholders such as board members, managers, shareholders and outlining the rules and procedures for making decisions. In doing so, it also provides the mechanism by which the company's objectives are set, ways to achieve these and monitoring performance. The paper acknowledges that CG is a vital issue where a corporate organization is concerned but asserts that it is impossible for an organization to satisfy all stakeholders hence it is best to create a balance between meeting organizational objectives and that of its stakeholders.
Journal of Interdisciplinary Economics, 2007
This paper surveys literature relating to the Anglo-American model (shareholder theory) and stakeholder theory of corporate governance in the modern global business environment. Stakeholder theory emerged during the 1970–80s and suggested that corporations should look beyond the shareholder perspective of profit maximisation. Through a survey of the literature we examine why the traditional Anglo-American model of corporate governance had difficulties when dealing with certain unethical business practices of corporate boards. Overall, this study investigates whether an application of deontological and teleological ethical theories may illustrate how boards of directors could manage stakeholder issues and deal with problematic moral dilemmas and ethical decisions.
Stakeholder Theory from a Management Perspective: Bridging the Shareholder/Stakeholder Divide
2016
The law literature posits a wide chasm between the standard doctrine of shareholder primacy/shareholder wealth maximisation and stakeholder theory. In so doing, the law literature largely ignores the contribution of our colleagues in the fields of management and business ethics, many of whom conceive of stakeholder theory as an essential part of the good management necessary to maximise shareholder wealth. This article reviews major contributions from the management literature and explains how they can help lawyers understand the proper role that consideration of stakeholder interests should play in management decision making. It argues that stakeholder theory as conceived by the management theorists broadly aligns with the legal concept of enlightened shareholder value and does not conflict with the shareholder wealth maximisation objective as currently understood under dominant paradigms of Anglo-Australian corporate law. To the contrary, stakeholder theory supports shareholder we...
academia.edu, 2012
In this study, the stakeholder relationships of firms listed in ISE50 index in the first quarter of 2011 are analyzed according to corporate governance principles. The necessary information is obtained from firms websites and publicly announced reports, and acquired information is processed and used for cumulative and descriptive statistics. Corporate policy relating to stakeholders, support for stakeholders participation in top management, corporates human resources policy, relationships with customers and suppliers, ethical principles, and corporate social responsibility subjects are analyzed, and in general, ISE50 firms are insufficient for conformity of corporate governance principles, however, criteria such as ethical principles, corporate social responsibility, human resources policy and mechanisms for maintaining customer satisfaction, ISE50 firms have sufficient compliance.
Corporate governance and democracy: The stakeholder debate revisited
Journal of Management and Governance, 2002
Stakeholding' is a term laden with many meanings. In this pape r we attempt to put some order on the discourse by confining attention to the corporation. We assess the origins and the intellectual foundations of the 'shareholder versus stakeholder' debate. We ask whether and how 'stakeholding' might be a more logical or rational system, a fairer or more democratic system, and one that provides better performative outcomes. Each of these claims is assessed in respect to the micro firm perspective and the macro economy wide perspective.
2007
The purpose of the present paper is to help bring some advances in the characterization of the emerging stakeholder model of corporate governance. This shall be achieved by analyzing CSR function at board level, board diversity and stakeholder engagement and by examining its relationship with financial performance. Based on an empirical study of an international sample of large companies, we found board responsibility for CSR to be a key factor in promoting engagement with primary and secondary stakeholders of the firm. Depending on the legal tradition of the country where the company is based, we found evidence that board diversity and stakeholder engagement are positively related to firm financial performance.