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Stakeholder Valuing: A Process for Identifying the Interrelationships between Firm and Stakeholder Attributes

Author

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  • Donna M. Carlon

    (College of Business, University of Central Oklahoma, 100 N. University Drive, Edmond, OK 73034, USA)

  • Alexis Downs

    (Meinders School of Business, Oklahoma City University, 2501 North Blackwelder, Oklahoma City, OK 73106, USA)

Abstract

As firms are creating and recreating themselves as stakeholder corporations, tensions mount between a firm’s fiduciary duties to its shareholders and the broader responsibilities inherent in a stakeholder focus. Firms have employed several techniques to help resolve this tension with limited success. We suggest that the next step in reducing this tension is formally accounting for stakeholder value through changes in financial reporting. We contend that stakeholders have a financial value to the firm that can and should be accounted for through the firm’s financial reporting system. We propose a three-step process we call stakeholder valuing (SV) to begin a conversation regarding how such a method can be created. SV begins with codifying the firm’s identity as a stakeholder entity, moves to assessing stakeholder value that’s consistent with that identity, and concludes with accounting for and reporting that value. What we are suggesting will be seen by some as a radical change in accounting practices but we believe it is necessary as we move toward a consistent, reliable, verifiable, transparent, and comparable means of accounting for the true value of a stakeholder corporation.

Suggested Citation

  • Donna M. Carlon & Alexis Downs, 2014. "Stakeholder Valuing: A Process for Identifying the Interrelationships between Firm and Stakeholder Attributes," Administrative Sciences, MDPI, vol. 4(2), pages 1-18, May.
    • Handle: RePEc:gam:jadmsc:v:4:y:2014:i:2:p:137-154:d:36480
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    References listed on IDEAS

    as
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    8. Rainer S. Masera & Giancarlo Mazzoni, 2007. "Shareholders and stakeholders value creation: an analytic foundation for value creation indicators," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 60(240), pages 3-31.
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    1. Azilah Kasim & Siti Noormala Jailani & Muhammad Fauzi Mokhtar & Jasmine Zea Raziah Radha Rashid Radha & Bussalin Khuadthong & Maebel Leong Sai Fong, 2023. "Community Perceptions on the Critical Success Factors of Hotels’ Community-Based Corporate Social Responsibility," Sustainability, MDPI, vol. 15(12), pages 1-26, June.
    2. Michal Bobek, 2014. "The Principal-Agent Theory and its Influence on the Quality of Assurance Services [Vliv vztahů zastoupení na kvalitu informací poskytovaných ověřovacími službami]," Český finanční a účetní časopis, Prague University of Economics and Business, vol. 2014(2), pages 52-68.
    3. Iryna Nyenno & Natalia Rekova & Svetlana Minakova, 2019. "Joint Value as a Measure of Sea Trade Port Stakeholder Effect," Social Sciences, MDPI, vol. 8(4), pages 1-15, April.
    4. Irina N. Tkachenko & Irina V. Pervukhina & Aleksandr A. Zlygostev, 2020. "Modeling the contribution and benefits of company stakeholders," Upravlenets, Ural State University of Economics, vol. 11(2), pages 2-15, April.

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