The Rise of Enlightened Shareholder Primacy and Its Impact on the US Corporate Self-Regulation

Abstract

The doctrine of Enlightened Shareholder Primacy (ESP) rejects the profit maximization focus in corporate governance. Its emergence helps company management to relate moral arguments associated with justice, fairness, and communitarianism with corporate self-regulation to reach an optimal welfare level. This article explicates the emergence of ESP and how it has contributed to the devolution into US corporate governance to create internal strategies focusing on pluralization of actors, ethics and accountability.

Keywords: Corporate governance, new governance, shareholder primacy, enlightened shareholder primacy, corporate social responsibility