Modern Paradigms of Management: The Legal Aspects

In addition to the weak supervision of the international financial markets, one of the key reasons for global financial, economic, and social crisis is the principle of maximizing value for shareholders; this principle is less known to the general public. It is a principle, which is especially developed in the Anglo-Saxon economic and legal model, but in the last two decades has become increasingly present also in Europe. On the basis of a more in-depth analysis, it becomes clear, however, that maximizing shareholder value is overly superficial, because it ignores other important stakeholders in modern corporations, and because it also ignores other important principles, according to which the successful corporations in modern market economy should function. We should not ignore that important risks are borne also by other stakeholders who do not have guarantees for their returns. Employees, for example, who acquire skills and educate themselves for the specific tasks and duties in the corporation, do not have guaranteed rewards in the form of promotion in their contracts. Governments, which frequently subsidize various corporations in various forms, do not have guaranteed returns for the taxpayers. This is the reason why maximizing shareholder value provides an overly superficial answer to the much more nuanced and complex question: how to distribute rewards among the stakeholders for their stakes in such a way to provide economically more balanced benefits to each of the stakeholders in order to improve their standards and to secure a long-term success of the corporation.