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A measure of the evolution of the company's orientation toward its primary stakeholders

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  • Alves, Carlos F.

Abstract

In recent years, many have argued for a greater orientation of companies toward defending the interests of their various stakeholders, and many firms have proclaimed their adherence to stakeholder capitalism. However, there is not a single measure that can objectively quantify the orientation of companies. This paper proposes metrics to capture the evolution of the primary stakeholder focus. An empirical application to ESG-rated European companies concludes that, in 2013-2021, companies seemed to move toward a greater focus on shareholders' interests to the detriment of a greater co-determination with employees' interests. Covid19 and the social capital of companies have attenuated this orientation.

Suggested Citation

  • Alves, Carlos F., 2022. "A measure of the evolution of the company's orientation toward its primary stakeholders," Finance Research Letters, Elsevier, vol. 50(C).
    • Handle: RePEc:eee:finlet:v:50:y:2022:i:c:s1544612322004202
    DOI: 10.1016/j.frl.2022.103215
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    References listed on IDEAS

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    1. Gao, Huasheng & Li, Kai & Ma, Yujing, 2021. "Stakeholder Orientation and the Cost of Debt: Evidence from State-Level Adoption of Constituency Statutes," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 56(6), pages 1908-1944, September.
    2. Pedersen, Lasse Heje & Fitzgibbons, Shaun & Pomorski, Lukasz, 2021. "Responsible investing: The ESG-efficient frontier," Journal of Financial Economics, Elsevier, vol. 142(2), pages 572-597.
    3. Gillan, Stuart L. & Koch, Andrew & Starks, Laura T., 2021. "Firms and social responsibility: A review of ESG and CSR research in corporate finance," Journal of Corporate Finance, Elsevier, vol. 66(C).
    4. Li, Tongxia & Lu, Chun, 2022. "Stakeholder orientation and cost stickiness: Evidence from a natural experiment," Finance Research Letters, Elsevier, vol. 47(PA).
    5. Gu, Leilei & Zhang, Huilin, 2022. "Stakeholder-oriented corporate investment: A catering perspective," Finance Research Letters, Elsevier, vol. 48(C).
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    Cited by:

    1. Alves, Carlos Francisco & Meneses, Lilian Lima, 2024. "ESG scores and debt costs: Exploring indebtedness, agency costs, and financial system impact," International Review of Financial Analysis, Elsevier, vol. 94(C).
    2. Petrus Venter & Rodney Duffett, 2022. "A Framework for a Generic Retail Charter: A Guide towards Sustainability and Stakeholder Support," Sustainability, MDPI, vol. 14(23), pages 1-29, November.

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