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Article
Publication date: 10 April 2009

Niels Mygind

The purpose of the paper is to clarify the relationship between stakeholder interests and the ownership of a company, and to specify the distinctions between three types

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Abstract

Purpose

The purpose of the paper is to clarify the relationship between stakeholder interests and the ownership of a company, and to specify the distinctions between three types of maximization: shareholder‐, stakeholder‐owner‐ and total stakeholder maximization.

Design/methodology/approach

This conceptual paper first analyzes how company‐related rents are connected to different stakeholder groups. These rents are defined as the monetary and non‐monetary returns from stakeholder involvement in a company, in excess of what stakeholders could achieve from their best alternatives. The paper distinguishes between general stakeholder benefits and the additional owner benefits a stakeholder secures by having controlling ownership. The stakeholder having the highest net benefits (benefits minus costs), and thus paying the highest price for ownership, will be the controlling owner. The controlling stakeholder‐owners' benefits are those which are maximized by the company. This leads to the second part of the paper, which analyzes different types of maximization.

Findings

The general type of maximization that companies pursue is stakeholder‐owner maximization. Maximization of shareholder value is a special case of stakeholder‐owner maximization. Only under quite restrictive assumptions is shareholder maximization larger or equal to stakeholder‐owner maximization. Total stakeholder maximization is calculated on the sum of the returns to all stakeholders including shareholders. Because of problems of measurement and practical application, total stakeholder maximization is difficult or impossible to achieve. Firms generally approximate to total stakeholder maximization by implementing stakeholder‐owner maximization under constraints defined by other stakeholder interests. With stronger regulation, pressure from different stakeholder groups, and more emphasis on corporate social responsibility, the decision area where the company can simultaneously maximize stakeholder‐owners' returns and stakeholder interests will be increased.

Originality/value

This paper breaks new ground by linking controlling ownership and stakeholder interests/rents. This is used to give precise definitions on three types of maximization: shareholder‐, stakeholder‐owner, and total stakeholder maximization.

Details

Corporate Governance: The international journal of business in society, vol. 9 no. 2
Type: Research Article
ISSN: 1472-0701

Keywords

Article
Publication date: 15 January 2018

Baah Aye Kusi, Agyapomaa Gyeke-Dako, Elikplimi Komla Agbloyor and Alexander Bilson Darku

The purpose of this paper is to explore the relationship between corporate governance structures and stakeholder and shareholder value maximization perspectives in 267…

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Abstract

Purpose

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.

Design/methodology/approach

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.

Findings

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.

Practical implications

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.

Originality/value

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.

Details

Corporate Governance: The International Journal of Business in Society, vol. 18 no. 2
Type: Research Article
ISSN: 1472-0701

Keywords

Book part
Publication date: 4 September 2003

Oliver Koll

Scanning both the academic and popular business literature of the last 40 years puzzles the alert reader. The variety of prescriptions of how to be successful (effective…

Abstract

Scanning both the academic and popular business literature of the last 40 years puzzles the alert reader. The variety of prescriptions of how to be successful (effective, performing, etc.) 1 Organizational performance, organizational success and organizational effectiveness will be used interchangeably throughout this paper.1 in business is hardly comprehensible: “Being close to the customer,” Total Quality Management, corporate social responsibility, shareholder value maximization, efficient consumer response, management reward systems or employee involvement programs are but a few of the slogans introduced as means to increase organizational effectiveness. Management scholars have made little effort to integrate the various performance-enhancing strategies or to assess them in an orderly manner.

This study classifies organizational strategies by the importance each strategy attaches to different constituencies in the firm’s environment. A number of researchers divide an organization’s environment into various constituency groups and argue that these groups constitute – as providers and recipients of resources – the basis for organizational survival and well-being. Some theoretical schools argue for the foremost importance of responsiveness to certain constituencies while stakeholder theory calls for a – situation-contingent – balance in these responsiveness levels. Given that maximum responsiveness levels to different groups may be limited by an organization’s resource endowment or even counterbalanced, the need exists for a concurrent assessment of these competing claims by jointly evaluating the effect of the respective behaviors towards constituencies on performance. Thus, this study investigates the competing merits of implementing alternative business philosophies (e.g. balanced versus focused responsiveness to constituencies). Such a concurrent assessment provides a “critical test” of multiple, opposing theories rather than testing the merits of one theory (Carlsmith, Ellsworth & Aronson, 1976).

In the high tolerance level applied for this study (be among the top 80% of the industry) only a handful of organizations managed to sustain such a balanced strategy over the whole observation period. Continuously monitoring stakeholder demands and crafting suitable responsiveness strategies must therefore be a focus of successful business strategies. While such behavior may not be a sufficient explanation for organizational success, it certainly is a necessary one.

Details

Evaluating Marketing Actions and Outcomes
Type: Book
ISBN: 978-0-76231-046-3

Book part
Publication date: 12 June 2017

Taekjin Shin

In this study, I explore the link between workforce downsizing and the predominance of a corporate governance model that espouses a shareholder value maximization

Abstract

In this study, I explore the link between workforce downsizing and the predominance of a corporate governance model that espouses a shareholder value maximization principle. Specifically, I examine how top managers’ shareholder value orientation affects the adoption of a downsizing strategy among large, publicly traded corporations in the United States. An analysis of CEOs’ letters to shareholders indicates that firms with CEOs who use language that espouses the shareholder value principle tend to have a higher rate of layoffs, after controlling for various indicators of the firm’s adherence to the shareholder value principle. The finding suggests that corporate governance models, particularly those advocated by powerful organizational elites, have a significant impact on workers by shaping corporate strategies toward the workforce. The key actors in this process were top managers who embraced the new management ideology and implemented corporate strategy to pursue shareholder value maximization.

Details

Emerging Conceptions of Work, Management and the Labor Market
Type: Book
ISBN: 978-1-78714-459-0

Keywords

Article
Publication date: 23 November 2021

Shin Han

This paper aims to provide a new conceptual approach to corporate social responsibility (CSR), termed enlightened shared value (ESV), by applying the social dilemma…

Abstract

Purpose

This paper aims to provide a new conceptual approach to corporate social responsibility (CSR), termed enlightened shared value (ESV), by applying the social dilemma paradigm and long-term value maximization.

Design/methodology/approach

In this conceptual paper, the author analyzes CSR as an organizational social dilemma, where the conflicts among stakeholders and between short- and long-term outcomes are inevitable. To minimize these conflicts, firms need to aim at long-term value maximization to provide the maximum outcome to the firm and satisfy all relevant stakeholders. Adopting these perspectives, the author introduces ESV and compares ESV with major CSR approaches.

Findings

ESV provides a clear metric and the method for CSR, which is lacking in existing CSR approaches. Consequently, ESV is superior to and has better applicability than existing CSR approaches. The author suggests that shifting focus to long-term outcomes can reduce the conflicts in CSR and make CSR a win-win game.

Originality/value

As an alternative to existing CSR approaches, ESV can provide the best outcome to the firm and all relevant stakeholders. ESV adds the understanding of CSR’s theoretical discussions and provides a practical guideline to practitioners.

Details

Social Responsibility Journal, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1747-1117

Keywords

Article
Publication date: 13 May 2020

Emmanuel Adegbite, Kenneth Amaeshi, Franklin Nakpodia, Laurence Ferry and Kemi C. Yekini

This paper aims to examine two important issues in corporate social responsibility (CSR) scholarship. First, the study problematises CSR as a form of self-regulation…

Abstract

Purpose

This paper aims to examine two important issues in corporate social responsibility (CSR) scholarship. First, the study problematises CSR as a form of self-regulation. Second, the research explores how CSR strategies can enable firms to recognise and internalise their externalities while preserving shareholder value.

Design/methodology/approach

This study uses a tinged shareholder model to understand the interactions between an organisation’s CSR approach and the effect of relevant externalities on its CSR outcomes. In doing this, the case study qualitative methodology is adopted, relying on data from one Fidelity Bank, Nigeria.

Findings

By articulating a tripodal thematic model – governance of externalities in the economy, governance of externalities in the social system and governance of externalities in the environment, this paper demonstrates how an effective combination of these themes triggers the emergence of a robust CSR culture in an organisation.

Research limitations/implications

This research advances the understanding of the implication of internalising externalities in the CSR literature in a relatively under-researched context – Nigeria.

Originality/value

The data of this study allows to present a governance model that will enable managers to focus on their overarching objective of shareholder value without the challenges of pursuing multiple and sometimes conflicting goals that typically create negative impacts to non-shareholding stakeholders.

Details

Corporate Governance: The International Journal of Business in Society, vol. 20 no. 5
Type: Research Article
ISSN: 1472-0701

Keywords

Article
Publication date: 1 May 2006

Gudrun Baldvinsdottir and Inga‐Lill Johansson

To illustrate and discuss how different types of responsibility values are mobilised in a Swedish international company.

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Abstract

Purpose

To illustrate and discuss how different types of responsibility values are mobilised in a Swedish international company.

Design/methodology/approach

The paper is informed by a constructivist pragmatism framework. The part of the study related to the case site was inspired by an ethnographic research approach and involved intensive face‐to‐face observations over a period of two years. Data was collected at four main levels: external and internal documents, observation of project meetings, interviews with project members, and informal talks with organisation members.

Findings

Possible conflicts of interest between human and business perspectives are exposed. Awareness of these interest‐conflicts, however, facilitates a potential bridging of the two perspectives. Our findings suggest possible explanations as to why management control (MC) models work in practice. Although values pertaining to shareholder maximisation are given prominence in external communication, the internal MC model also emphasises the values considered necessary and desirable by professionals, such as confidence, commitment and respect. The study reveals that the way values are handled affects the responsibility taken by employees in everyday situations. By using the constructivist pragmatism framework, it becomes clear that values cause people to act, and not MC systems.

Originality/value

Although many studies have described the shortcoming of MC models, few studies platform from the concept of responsibility. In this paper it is shown how accounting communicates values underpinning responsibility, and contributes towards explaining why certain types of MC models can be more successful than others.

Details

Qualitative Research in Accounting & Management, vol. 3 no. 2
Type: Research Article
ISSN: 1176-6093

Keywords

Article
Publication date: 1 May 2006

Richard Tudway and Ana‐Maria Pascal

This purpose of this paper is to examine four separate though interconnected questions concerning corporations operating, in Anglo American jurisdictions.

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Abstract

Purpose

This purpose of this paper is to examine four separate though interconnected questions concerning corporations operating, in Anglo American jurisdictions.

Design/methodology/approach

The paper first examines the nature of the limited liability corporation as an entity dedicated to maximizing shareholder value, and how far this role is consistent with the pursuit of wider policies of corporate social responsibility (CSR). Second, it reviews the ownership arrangements of the corporation, the fiduciary duties of board directors and how this is translated into the task of maximizing shareholder value through the pursuit of profits. Third, it investigates how directors position themselves commercially in maximizing shareholder value and whether shareholders express views on how shareholder value can best be maximized. Finally conclusions are drawn on how best corporations and their directors can address the challenge of meeting shareholder value and how far this implies realignment in terms of wider societal expectations. The method of research used includes an examination of statute law governing the corporation, judge's law, regulatory law, other soft law in the context of outsider controlled capital markets. Relevant published research material is also declared in the bibliography.

Findings

Conclusions drawn suggest that the premise of maximization of shareholder value may very well entail the pursuit by directors of wider social and economic objectives consistent with CSR, if this is consistent with the enhancement of shareholder value. They also point to a lack of clarity on the question of what is expected of directors in meeting their fiduciary and broader director's duties as expressed in the objective of maximizing shareholder value. Evidence suggests that there is little effective communication between shareholders and directors on how best shareholder value can be maximized. Specifically the analysis focuses on how best to overhaul the mechanisms of governance and accountability if directors and the shareholders they represent are to develop and execute rational commercial policies aimed at maximizing shareholder value.

Originality/value

The paper breaks new ground in linking CSR to the enhancement of shareholder value and in suggesting that directors may be negligent in their duty to promote shareholder value if they fail do so. The paper should be of interest to company directors, company legal advisors; other corporate lawyers involved in litigation against directors, and policy makers in government.

Details

Corporate Governance: The international journal of business in society, vol. 6 no. 3
Type: Research Article
ISSN: 1472-0701

Keywords

Article
Publication date: 5 March 2018

Massimo Florio, Matteo Ferraris and Daniela Vandone

This paper looks at state-owned enterprises (SOEs) from the angle of the market for corporate control and analyzes in detail the reported rationales of a sample of 355…

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Abstract

Purpose

This paper looks at state-owned enterprises (SOEs) from the angle of the market for corporate control and analyzes in detail the reported rationales of a sample of 355 mergers and acquisition (M&A) deals performed by SOEs as acquirers over the period 2002-2012. The purpose of this paper, after having created a taxonomy of deal motivations, is to empirically test two alternative hypotheses: deviation vs convergence of M&A deal rationales between state-owned and private enterprises.

Design/methodology/approach

The data set is obtained by combining firm-level information from two sources, Zephyr and Orbis (Bureau Van Dijk). A recursive algorithm is developed to infer the ownership nature of the enterprises at the time the deal took place and then the authors double-checked the identity of the global ultimate owner by visual inspection of all the available information. Motivations are analyzed through a case-by-case analysis and classified into several categories, thereby providing a taxonomy of rationales behind SOE M&As and discussing their differences and similarities relative to private firms.

Findings

More than 60 percent of the deals performed by SOEs as acquirers are driven by “shareholder value maximization” motives, similarly to private enterprise acquirers. The other 40 percent of deals are almost equally spread among three rationales that specifically relate to the role of modern state capitalism in the economy. “Financial distress” motivation, which is the only one clearly deviating from the objectives of profit maximization typical of private ownership, is far less important than the others.

Research limitations/implications

The paper does not analyze the case studies in detail. Neither does it correlate the evidence with the quality of corporate governance or the quality of institutions in the country. This would be interesting in order to discover whether the alignment of objectives between public and private enterprises is enhanced by certain features of public sector management, as suggested by the OECD (2015) Guidelines.

Practical implications

The paper suggests some policy implications in terms of reforms of the corporate governance of the SOEs and accountability of their management against clearly stated public missions. It also calls for the need for citizens to be informed in a transparent way about the rationales of major M&A deals when a SOE is on the acquirer side, and the consistency of such rationales with the mission assigned by governments to the enterprises they own. Finally, it underlines that regulatory concerns raised in many countries by the rise of cross-border SOE M&As are in most of the cases unfounded.

Originality/value

Existing literature has mainly focused on private corporate M&A deals or has just disregarded the ownership status of the acquiring firm. This paper focuses on the motivations for SOE deals in order to elaborate a taxonomy of SOE deal rationales and to identify the differences and similarities between private corporate firms.

Details

International Journal of Public Sector Management, vol. 31 no. 2
Type: Research Article
ISSN: 0951-3558

Keywords

Article
Publication date: 1 August 1996

R. Charles Moyer, Ramesh P. Rao and Jean Francois Regnard

This paper tests the mimicking propositions from signalling theory as they relate to stated firm objectives and firm performance. We classify the corporate objectives of a…

Abstract

This paper tests the mimicking propositions from signalling theory as they relate to stated firm objectives and firm performance. We classify the corporate objectives of a large sample of firms and evaluate firm performance relative to these objectives. We find that poorly performing firms more frequently cite shareholder wealth maximization as their primary objective than do better performing firms. There is no evidence that firms citing a shareholder wealth maximization objective perform any better than firms with alternative objectives. Similar evidence is found for other common corporate objectives. Overall, our results are consistent with signalling theory in that non‐enforceable signals, such as proclamations of corporate objectives, are not credible signals for investors.

Details

Managerial Finance, vol. 22 no. 8
Type: Research Article
ISSN: 0307-4358

1 – 10 of over 4000