The Role of Stakeholders in Corporate Governance: A View from Accounting Research

100 Pages Posted: 13 Mar 2018

See all articles by Gaizka Ormazabal

Gaizka Ormazabal

University of Navarra, IESE Business School

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Date Written: March 2018

Abstract

I review the empirical research on the role of stakeholders in corporate governance with an emphasis in contributions from the accounting literature. In particular, I focus on the following stakeholders: employees, the general public, the media, related firms, the government, private regulators, gatekeepers, and foreigners. This list does not include capital providers (shareholders and debt-holders), as the governance role of these stakeholders has already been covered by prior surveys in the academic literature. The discussion is structured around each stakeholder's incentives to influence managerial behavior, the mechanisms through which stakeholders act on managerial actions, as well as any concerns about this influence. All the analyzed stakeholders appear capable of influencing managerial actions to some extent, but the efficacy of stakeholders' monitoring role is controversial. Empirical research uncovers several factors that undermine stakeholders' incentives to discipline corporate managers. And more critically, in some cases stakeholders' incentives appear to be misaligned not only with shareholders' interests but also with the public interest. Taken together, the reviewed evidence suggests that the monitoring role involves a wide range of actors beyond the board of directors and capital providers. The review also points out that there is still much to learn about stakeholder monitoring.

Suggested Citation

Ormazabal, Gaizka, The Role of Stakeholders in Corporate Governance: A View from Accounting Research (March 2018). CEPR Discussion Paper No. DP12775. Available at SSRN: https://ssrn.com/abstract=3138837

Gaizka Ormazabal (Contact Author)

University of Navarra, IESE Business School ( email )

Avenida Pearson 21
Barcelona, 08034
Spain

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