Includes bibliographical references. Offprint: Business lawyer. Volume 77, number 3 (Summer 2022)
Summary:
Under the stakeholder model of corporate governance, directors may confer benefits on corporate constituencies other than shareholders without regard to whether doing so produces benefits for the shareholders even in the long run. Contrary to what advocates of stakeholder theory often say, stakeholder theory does not put all corporate constituencies on a par, letting directors give equal consideration to the interests of all constituencies. Rather, stakeholder theory uniquely disadvantages shareholders, allowing directors to transfer value from shareholders to other constituencies but never from other constituencies to shareholders. More importantly, although critics of the stakeholder model going back to Berle have complained that the model provides directors with no clear standard by which to make business decisions, this criticism grossly understates the problem. In fact, the stakeholder model says nothing at all about which interests of the various constituencies are legitimate interests, much less about how such interests should be balanced against each other. As a result, the model provides no normative criteria of any kind on the basis of which we can intelligibly say that one business decision is any better--or any worse--than any other. Consequently, under stakeholder theory, every possible decision is as good and as bad as every other possible decision. The stakeholder model is thus not just insufficiently determinate but radically indeterminate.
OCLC:
(OCoLC)1434058088
Locations:
OVUX522 -- University of Iowa Libraries (Iowa City)
This resource is supported by the Institute of Museum and Library Services under the provisions of the Library Services and Technology Act as administered by State Library of Iowa.