Moving Towards Stakeholderism? Constituency Statutes, Enlightened Shareholder Value and All That: Much Ado About Little?
Andrew R. Keay
University of Leeds - School of Law
January 4, 2010
While Anglo-American jurisdictions have seen shareholder primacy dominate as the theory which provides what the objective of the large public company is to be, there are indications in the past 20 years that the stakeholder theory, the other leading theory that addresses the objective of the company, has become increasingly popular in many Anglo-American jurisdictions, and there is some suggestion that this approach is developing support in academic and practitioner circles. A number of factors have been identified to support this view and are adverted to in the paper. This paper focuses on legal developments in Anglo-American jurisdictions (and particularly the US and UK) to assess whether there is a movement in these jurisdictions to more of a stakeholder approach as far as its corporate governance is concerned. To this end the paper examines so-called constituency statutes in the US and their impact, and the concept of enlightened shareholder value as it has been developed in the UK (under the Companies Act 2006), as well as referring briefly to developments in Canada and Australia. The paper concludes that the pieces of legislation examined in the paper only appear to provide greater stakeholder focus and they really add, from a strict legal viewpoint, little in a drive towards stakeholderism. This is due to a number of reasons but a major one is the lack of power in stakeholders to challenge directorial actions in the courts or in any other way.
Number of Pages in PDF File: 57
Keywords: corporate governance, enlightened shareholder value, constituency statutues, stakeholder theory, shareholder primacy, corporations
JEL Classification: G3, K22, L21
Date posted: January 4, 2010