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The recent financial crisis has restarted the debate of the value of both shareholder and stakeholder theories. This paper aims to continue this discussion.

The paper reviews existing literature and examines the benefits and problems associated with these frameworks through the lens of the recent events which have taken place during the financial crisis.

The main assertion of this paper is that shareholder theory is in itself a sound theory. Yet, some executives following this theory could have brought disrepute to it. In contrast, the stakeholder theoretical framework has yet to assert its influence because the concept is not yet unambiguously defined, which makes it difficult for the framework to become operational in practical business settings.

Future research should seek consensus on the scope and definition of the stakeholder model, as well as who the stakeholders should include. It should also focus on developing the tools and techniques necessary for the incorporation of stakeholder theory into business operations.

Policy makers could work with industry bodies and business leaders to encourage them to place greater emphasis on the interests of non‐shareholders and encourage collaboration between various groups of stakeholders to achieve corporate goals.

The paper continues the shareholder and stakeholder theory debate in light of the recent economic crisis.

The preceding article, “The Social Responsibility of Corporate Management: A Classical Critique,” argues that the Shareholder Theory, which the authors refer to as the “Friedman Paradigm” represents the only intellectually and ethically meritorious model for assessing corporate social responsibility. This response argues that the 19th Century Shareholder Theory is based upon numerous factual and legal inaccuracies and fictions when evaluated in the context of the modern era. Requiring that management serve only the interests of the shareholders is morally untenable. The authors’ assertion that the competing theory, The Stakeholder Theory, is unworkable is based upon both a misunderstanding and misinterpretation of the theory. Refinements and clarifications about who qualifies as a stakeholder make the Stakeholder Theory both workable and a very useful way to improve corporate governance. Now is the time to apply the Stakeholder Theory as part of the ongoing process of improving the moral and social responsibility of corporation management.

This paper aims to show how organisation theory can be used to understand the controversy between the shareholder and the stakeholder perspectives. Rationalistic and open system theories may enhance research on corporate governance by offering well-defined concepts and by specifying core relationships.

This paper applies descriptions of the two perspectives in organisation theory as a “method” for illustrating how they are linked to and support the shareholder versus the stakeholder perspectives.

The controversy stems from the fact that the shareholder and the stakeholder perspectives address different relationships. The shareholder perspective captures two relationships that accord with rationalistic organisation theory: shareholders are managing the managers and the organisation, and managers are managing the corporation on behalf of the owners. The stakeholder perspective focuses on three relationships that are not concordant with system theory: managers are managing the shareholders (i.e. the symbolic management of stockholders), managers are managing the corporation (i.e. general management theory) and managers are managing the stakeholders.

Organisation theory provides suggestions for more fruitful definitions of the often-used concepts of direction, control, administration and influence. These terms may be substituted with the well-defined concepts of management, power and control.

Proponents of organisation theory find it theoretically difficult to deal with the topic of corporate governance, if they do at all. When they do, they do it only perfunctorily.

Organisation theory may strengthen research on corporate governance if we insist on both theoretical clarifications of major relationships and on the use of more strictly defined concepts.

Shareholder Theory allows management to ignore the interests of the other constituencies while pursuing its own narrow self‐interest under the guise (the ethical facade) of promoting the interests of the shareholder owners. The Shareholder Theory does not provide any relistic counterweight against management abuse. The Enron example strengthens the arguments for the use of Stakeholder theory and exposes the utter failure of the Shareholder Theory.

Theories of management require normative justification; that is, they rely on some conception of what is morally good, right, and just. This chapter examines some of the normative reasons for adopting a stakeholder theory of management and for rejecting the once, and perhaps still, “dominant” shareholder-centric approach. This chapter then surveys some of the prominent “normative cores” that are used to ground stakeholder theory, that is, Kantian, contractarian, feminist ethics, and ethical pragmatism, and the moral obligations that each normative approach generates. Some pressing questions are raised with respect to each normative approach. To what extent ought we to recognize imperfect obligations to shareholders? Are contractarian hypernorms morally substantive? How exactly should we care about stakeholders, and is care even an appropriate attitudinal response? Without some commitment to objective ethical standards, how can pragmatists resolve stakeholder conflict?

Audit hour reporting is rare internationally. Thus, to what extent shareholders have the power to influence audit effort/hour demand is a question left unanswered. This study aims to use unique South Korean data to determine whether the increasing power of the largest foreign/domestic shareholders and blockholders can influence audit hour demand.

In this study ordinary least squares (OLS) regression analysis is conducted using a sample of Korean listed firms over the 2004–2018 sample period.

The results show: as the percentage equity holding of the largest foreign shareholder and blockholder (>5%) increases, audit hour demand increases. As the shareholding of the largest domestic shareholder increases, audit hour demanded decreases. The association between audit fees/hours is not qualitatively indifferent, after controlling for the audit fee premium effect. Furthermore, the largest foreign shareholder is shown to demand increasingly higher levels of audit hours from Big4 auditors, relative to NonBig4. All results are consistent with audit demand theory.

Whilst previous studies offer audit fee/risk interpretations, this study extends the literature by developing a framework to explain why audit hour demands differ for specific groups. Because audit hour information is rare internationally, the study has important policy implications.

The purpose of this paper is to explore the relationship between corporate governance structures and stakeholder and shareholder value maximization perspectives in 267 African banks from 2006 to 2011.

The authors used the Prais–Winsten ordinary least squares and random effect regression models to explore this relationship to ensure consistency and efficiency in results. The data for this study were collected from Bankscope.

The results of this study show that corporate governance structures such as CEO duality, nonexecutive members and extreme large board size lead to a reduction in both shareholder and stakeholder value maximization. However, audit independence and board size also promote both shareholder and stakeholder value maximization. Although gender diversity promotes profit maximization, it was not significant in any of the models estimated. The results further suggest that the same corporate governance structures promote and detract shareholder and stakeholder value maximization in Africa although the effect of corporate governance structures was weightier on shareholder value maximization confirming the agency theory.

From these findings, bank management must pursue the institution of good corporate governance structures and avoid weak corporate governance structures to promote shareholder and stakeholder value maximization. Also equity holders may have to pay particular attention to corporate governance structures because they benefit the most from the institution of good corporate governance structures.

This study explores and compares how corporate governance structures promote shareholder and stakeholder value maximization separately in African banks. To the best of the authors’ knowledge, this is the first of such studies.

The study explores the use of professional investor relations (IR) practices in South African (SA) listed companies to understand which theories may be responsible for IR's adoption and growth in South Africa, an emerging economy. Therefore, this study evaluates shareholder value maximisation, stakeholder and legitimization theory and institutional isomorphism theory as possible theories to explain professional IR behaviour in SA listed companies.

The study design is qualitative and exploratory, based on a questionnaire developed and sent to all companies listed on the Johannesburg Securities Exchange (JSE).

The results indicate evidence of isomorphic spread to SA environments from practices observed in the UK and the USA, which we find are mostly performed to promote shareholder interests. The data suggest some evidence that the communication needs of black economic empowerment and environmental, social and governance (ESG) investors are given priority, suggesting the utility of professional IR to obtain legitimisation from society. Contrary to expectation is that social media communication channels are not extensively used.

The descriptive nature of this study may be valuable to IR practitioners to improve SA IR practises, while neglected legitimisation opportunities with regard to the needs of ESG and black economic empowerment shareholders may be fruitfully addressed by practitioners.

This study innovates in its use of legitimisation theory and isomorphism theory to develop the study's expectations. Social problems provide contextual elements unique to SA which provides a good opportunity to test the expectation of legitimisation theory's influence on professional IR practices.

Global investors demand, regulators require, and companies disclose their sustainability performance information, and scholars have started to conduct research on sustainability performance, reporting and assurance. The goal of firm value creation can be achieved when management considers the interests of all stakeholders and integrates all five economic, governance, social, ethical, and environmental (EGSEE) dimensions of sustainability performance into managerial strategies, actions and reporting. This paper provides a synthesis of research on sustainability and presents a theoretical framework consisting of theories and standards relevant to all five EGSEE dimensions of sustainability performance and risks and their integration into corporate culture, business models and reporting in creating stakeholder value.

Corporate governance has become a core topic in management research and business practice. Recent debates like – environmental responsibility, sustainability, ethics, corporate control, generation, protection and distribution of wealth, the role of the board and senior executives in setting standards for performance management, and stakeholder relationship management – have strong links to organisational trust. However, management literature has been relatively silent on how various corporate governance configurations and perspectives potentially shape trust relations within the organisation, especially in Africa. Thus, this chapter reviews corporate governance through the lens of the institutional logics perspective evident in western capitalism and develops a framework connecting various governance configurations to organisational trust. Doing so provides new directions for those seeking to develop further research in corporate governance, institutional logics and organisational trust.