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Shareholder primacy or stakeholder governance?

Author

Listed:
  • Schoenmaker, Dirk
  • Schramade, Willem

Abstract

Externalities happen largely in the private sector and cannot be fully separated from production decisions. Decision-making in companies thus co-determines the degree of sustainability of an economy. Advances in impact valuation allow us to express the stakeholder interests in finance and valuation terms. We can thus compare investment decisions and payout decisions for three types of models: the shareholder value model, the shareholder welfare model, and the stakeholder model. Our results show that stakeholder-driven companies are better able to pursue a sustainable economy. Corporate governance should be adjusted accordingly.

Suggested Citation

  • Schoenmaker, Dirk & Schramade, Willem, 2024. "Shareholder primacy or stakeholder governance?," Finance Research Letters, Elsevier, vol. 69(PB).
    • Handle: RePEc:eee:finlet:v:69:y:2024:i:pb:s154461232401273x
    DOI: 10.1016/j.frl.2024.106244
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    More about this item

    Keywords

    Corporate governance; Shareholder value; Shareholder welfare; Stakeholder value; Externalities; Value creation;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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