IDEAS home Printed from https://ideas.repec.org/a/bla/eufman/v27y2021i2p196-207.html
   My bibliography  Save this article

Corporate stakeholders, corporate valuation and ESG

Author

Listed:
  • Bradford Cornell
  • Alan C. Shapiro

Abstract

In addition to explicit contracts, corporations issue their stakeholders implicit claims, including fair treatment of employees and the promise of continuing service to customers. Corporate value is created by selling these implicit claims for more than it costs to honour them. Recently, a new class of non‐investor stakeholders, related to environmental, social and governance (ESG) issues, has arisen. Although many ESG advocates stress their role in creating shareholder value, they do not explain how this value creation occurs. This paper shows that implicit claims provide a critical link that ties non‐investor stakeholders and ESG to shareholder value, both its creation and its possible destruction.

Suggested Citation

  • Bradford Cornell & Alan C. Shapiro, 2021. "Corporate stakeholders, corporate valuation and ESG," European Financial Management, European Financial Management Association, vol. 27(2), pages 196-207, March.
    • Handle: RePEc:bla:eufman:v:27:y:2021:i:2:p:196-207
    DOI: 10.1111/eufm.12299
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/eufm.12299
    Download Restriction: no
    File URL: https://libkey.io/10.1111/eufm.12299?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Williamson, Oliver, 2009. "The Theory of the Firm as Governance Structure: From Choice to Contract," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 6, pages 111-134, December.
    2. Joseph E. Aldy & Richard Zeckhauser, 2020. "Three prongs for prudent climate policy," Southern Economic Journal, John Wiley & Sons, vol. 87(1), pages 3-29, July.
    3. Becker, Gary S., 1971. "The Economics of Discrimination," University of Chicago Press Economics Books, University of Chicago Press, edition 2, number 9780226041162, January.
    4. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    5. R. H. Coase, 2013. "The Problem of Social Cost," Journal of Law and Economics, University of Chicago Press, vol. 56(4), pages 837-877.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Doukas, John A. & Zhang, Rongyao, 2021. "Managerial ability, corporate social culture, and M&As," Journal of Corporate Finance, Elsevier, vol. 68(C).
    2. Yuming Zhai & Zhenghuan Cai & Han Lin & Ming Yuan & Ye Mao & Mingchuan Yu, 2022. "Does better environmental, social, and governance induce better corporate green innovation: The mediating role of financing constraints," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 29(5), pages 1513-1526, September.
    3. Theerasak Nitlarp & Supaporn Kiattisin, 2022. "The Impact Factors of Industry 4.0 on ESG in the Energy Sector," Sustainability, MDPI, vol. 14(15), pages 1-19, July.
    4. Jarosław Kaczmarek, 2024. "Effectiveness of Company Value Creation Based on Excess Market Value-Added Assessment," Sustainability, MDPI, vol. 16(9), pages 1-25, April.
    5. Chowdhury, Rajib & Doukas, John A. & Park, Jong Chool, 2021. "Stakeholder orientation and the value of cash holdings: Evidence from a natural experiment," Journal of Corporate Finance, Elsevier, vol. 69(C).
    6. Zheng, Zhigang & Li, Jiarong & Ren, Xingzi & Guo, Jie Michael, 2023. "Does corporate ESG create value? New evidence from M&As in China," Pacific-Basin Finance Journal, Elsevier, vol. 77(C).
    7. Reinier de Adelhart Toorop & Dirk Schoenmaker & Willem Schramade, 2024. "Decision Rules for Corporate Investment," IJFS, MDPI, vol. 12(1), pages 1-15, March.
    8. Chen, Lifeng & Khurram, Muhammad Usman & Gao, Yuying & Abedin, Mohammad Zoynul & Lucey, Brian, 2023. "ESG disclosure and technological innovation capabilities of the Chinese listed companies," Research in International Business and Finance, Elsevier, vol. 65(C).
    9. Domenico Rocco Cambrea & Francesco Paolone & Nicola Cucari, 2023. "Advisory or monitoring role in ESG scenario: Which women directors are more influential in the Italian context?," Business Strategy and the Environment, Wiley Blackwell, vol. 32(7), pages 4299-4314, November.
    10. Chowdhury, Rajib & Doukas, John A., 2022. "Protection of trade secrets and value of cash holdings: Evidence from a natural experiment," Journal of Banking & Finance, Elsevier, vol. 143(C).
    11. Radu-Alexandru Șerban & Diana Marieta Mihaiu & Mihai Țichindelean, 2022. "Environment, Social, and Governance Score and Value Added Impacts on Market Capitalization: A Sectoral-Based Approach," Sustainability, MDPI, vol. 14(4), pages 1-25, February.
    12. Xu, Jian & Sheng, Yan, 2023. "Regulations, politics, and firm green innovation," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 13-32.
    13. Shuying Li & Yujie Liu & Yang Xu, 2022. "Does ESG Performance Improve the Quantity and Quality of Innovation? The Mediating Role of Internal Control Effectiveness and Analyst Coverage," Sustainability, MDPI, vol. 15(1), pages 1-25, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Williamson, Oliver E., 2010. "Transaction Cost Economics: The Natural Progression," Journal of Retailing, Elsevier, vol. 86(3), pages 215-226.
    2. Caleb Bernacchio, 2023. "Business and the Ethics of Recognition," Journal of Business Ethics, Springer, vol. 185(1), pages 1-16, June.
    3. Todorova, Tamara, 2022. "Оливър Уилямсън: Новатор На 20 Век И Основател На Новата Институционална Икономика [Oliver Williamson: an innovator of the 20th century and founder of the new institutional economics]," MPRA Paper 121077, University Library of Munich, Germany.
    4. Stephanie Rosenkranz & Patrick W. Schmitz, 2007. "Can Coasean Bargaining Justify Pigouvian Taxation?," Economica, London School of Economics and Political Science, vol. 74(296), pages 573-585, November.
    5. repec:bla:jcmkts:v:47:y:2009:i::p:483-506 is not listed on IDEAS
    6. Alley Ibrahim S. & Adebayo Abimbola L. & Oligbi Blessing O., 2016. "Corporate Governance and Financial Performance Nexus: Any Bidirectional Causality?," International Journal of Management and Economics, Warsaw School of Economics, Collegium of World Economy, vol. 50(1), pages 82-99, June.
    7. Amar Gande & Kose John & Vinay B. Nair & Lemma W. Senbet, 2020. "Taxes, institutions, and innovation: Theory and international evidence," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(9), pages 1413-1442, December.
    8. Patibandla, Murali, 2006. "Equity pattern, corporate governance and performance: A study of India's corporate sector," Journal of Economic Behavior & Organization, Elsevier, vol. 59(1), pages 29-44, January.
    9. Yochanan Shachmurove, 2012. "Failing Institutions Are at the Core of the U.S. Financial Crisis," PIER Working Paper Archive 12-040, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    10. Kenneth Ayotte & Patrick Bolton, 2011. "Optimal Property Rights in Financial Contracting," The Review of Financial Studies, Society for Financial Studies, vol. 24(10), pages 3401-3433.
    11. Iavor Marangozov, 2005. "From Practice to Theory of the International Joint Ventures," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 2, pages 44-77.
    12. Sagebiel, Julian & Müller, Jakob R. & Rommel, Jens, 2013. "Are Consumers Willing to Pay More for Electricity from Cooperatives? Results from an Online Choice Experiment in Germany," MPRA Paper 52385, University Library of Munich, Germany.
    13. Olivier Meier & Aurélie Sannajust, 0. "The smart contract revolution: a solution for the holdup problem?," Small Business Economics, Springer, vol. 0, pages 1-16.
    14. Jayesh Kumar, 2003. "Ownership Structure and Corporate Firm Performance," Finance 0304004, University Library of Munich, Germany.
    15. Art Durnev & E. Han Kim, 2005. "To Steal or Not to Steal: Firm Attributes, Legal Environment, and Valuation," Journal of Finance, American Finance Association, vol. 60(3), pages 1461-1493, June.
    16. Evans, Lewis, 1998. "The Theory and Practice of Privatisation," Working Paper Series 19035, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    17. Wang, Sen & Bogle, Tim & van Kooten, G. Cornelis, 2012. "Forestry and the New Institutional Economics," Working Papers 130818, University of Victoria, Resource Economics and Policy.
    18. Per L. Bylund, 2015. "Signifying Williamson's Contribution to the Transaction Cost Approach: An Agent-Based Simulation of Coasean Transaction Costs and Specialization," Journal of Management Studies, Wiley Blackwell, vol. 52(1), pages 148-174, January.
    19. Deffains, Bruno & Demougin, Dominique M., 2006. "Governance: Who controls matters," SFB 649 Discussion Papers 2006-053, Humboldt University Berlin, Collaborative Research Center 649: Economic Risk.
    20. Gary H. Jefferson, 1999. "Missing Market in Labor Quality: The Role of Quality Markets in Transition," William Davidson Institute Working Papers Series 260, William Davidson Institute at the University of Michigan.
    21. Ng, Desmond W. & Salin, Victoria, 2012. "An Institutional Approach to the Examination of Food Safety," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 15(2), pages 1-26, May.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:eufman:v:27:y:2021:i:2:p:196-207. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/efmaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.