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On stakeholder theory and corporate investment under financial frictions

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  • Dariya Mykhayliv
  • Klaus G. Zauner

Abstract

The view that corporations have a wider focus than just maximising shareholder value has received considerable attention from practitioners, managers, and academics alike. We investigate the Q theory of corporate investment with financial frictions when management maximises stakeholder value instead of shareholder value. Different objective functions are investigated. We characterise the optimal investment and financial policy of the firm. The results show that stakeholder firms invest more than shareholder firms, that is, over invest, and an increase of stakeholder shares increases investment, except when equity issuing firms face severe informational asymmetries or severe cost of external equity. We also discuss different approaches to model investment of stakeholder firms and their implications for empirical analysis.

Suggested Citation

  • Dariya Mykhayliv & Klaus G. Zauner, 2025. "On stakeholder theory and corporate investment under financial frictions," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 30(1), pages 803-810, January.
    • Handle: RePEc:wly:ijfiec:v:30:y:2025:i:1:p:803-810
    DOI: 10.1002/ijfe.2942
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