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Shareholder and stakeholder theory: after the financial crisis

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  • Terence Tse

Abstract

Purpose - The recent financial crisis has restarted the debate of the value of both shareholder and stakeholder theories. This paper aims to continue this discussion. Design/methodology/approach - The paper reviews existing literature and examines the benefits and problems associated with these frameworks through the lens of the recent events which have taken place during the financial crisis. Findings - The main assertion of this paper is that shareholder theory is in itself a sound theory. Yet, some executives following this theory could have brought disrepute to it. In contrast, the stakeholder theoretical framework has yet to assert its influence because the concept is not yet unambiguously defined, which makes it difficult for the framework to become operational in practical business settings. Research limitations/implications - Future research should seek consensus on the scope and definition of the stakeholder model, as well as who the stakeholders should include. It should also focus on developing the tools and techniques necessary for the incorporation of stakeholder theory into business operations. Social implications - Policy makers could work with industry bodies and business leaders to encourage them to place greater emphasis on the interests of non‐shareholders and encourage collaboration between various groups of stakeholders to achieve corporate goals. Originality/value - The paper continues the shareholder and stakeholder theory debate in light of the recent economic crisis.

Suggested Citation

  • Terence Tse, 2011. "Shareholder and stakeholder theory: after the financial crisis," Qualitative Research in Financial Markets, Emerald Group Publishing Limited, vol. 3(1), pages 51-63, April.
    • Handle: RePEc:eme:qrfmpp:v:3:y:2011:i:1:p:51-63
    DOI: 10.1108/17554171111124612
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    References listed on IDEAS

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    1. Michael C. Jensen, 2010. "Value Maximization, Stakeholder Theory, and the Corporate Objective Function," Journal of Applied Corporate Finance, Morgan Stanley, vol. 22(1), pages 32-42, January.
    2. Huang, Rocco & Ratnovski, Lev, 2011. "The dark side of bank wholesale funding," Journal of Financial Intermediation, Elsevier, vol. 20(2), pages 248-263, April.
    3. John A. Doukas & Dimitris Petmezas, 2007. "Acquisitions, Overconfident Managers and Self‐attribution Bias," European Financial Management, European Financial Management Association, vol. 13(3), pages 531-577, June.
    4. Mark Schwartz, 2006. "God as a Managerial Stakeholder?," Journal of Business Ethics, Springer, vol. 66(2), pages 291-306, June.
    5. Rajgopal, Shivaram & Shevlin, Terry, 2002. "Empirical evidence on the relation between stock option compensation and risk taking," Journal of Accounting and Economics, Elsevier, vol. 33(2), pages 145-171, June.
    6. Phillips, Robert & Freeman, R. Edward & Wicks, Andrew C., 2003. "What Stakeholder Theory is Not," Business Ethics Quarterly, Cambridge University Press, vol. 13(4), pages 479-502, October.
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    Cited by:

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    8. Uzma Bashir, 2017. "Determinants of Corporate Philanthropy: A Case of Karachi Stock Exchange," International Econometric Review (IER), Econometric Research Association, vol. 9(1), pages 21-38, April.
    9. Claudio Nuber & Patrick Velte & Jacob Hörisch, 2020. "The curvilinear and time‐lagging impact of sustainability performance on financial performance: Evidence from Germany," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(1), pages 232-243, January.
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