Journal of Business Ethics 102 (S1):21-32 (2011)

Abstract
Contemporary academic and policy discussions of corporate governance tend to accord primacy to the interests of shareholders. While the primacy (descriptive or prescriptive) of shareholders is argued for in various ways, others seek to promote a wider stakeholder model of the firm and its governance. In both cases, the interests of creditors tend to be neglected. In this paper, the fundamental position of creditors in a system of corporate law that offers limited liability is reasserted and explained, and the implications explored. It is demonstrated that there are, in effect, two modes of governance possible for a limited liability corporation: the “normal” mode, when shareholders’ interests are primary, and the “distressed” mode, when creditors’ interests are paramount. As a result of this analysis, writers on corporate governance who are influenced by certain managerial myths or economic theories of the firm are encouraged to view the position of shareholders in a more informed light. Writers on business ethics, who often find themselves contending, perhaps implicitly, with inappropriate understandings of the nature of business corporations and their governance, are similarly alerted to the weakness of certain positions perceived as antithetical to their agenda. Finally, business ethicists who advocate a stakeholder perspective are encouraged to recognize the position of creditors and to pay more attention to them as a stakeholder group
Keywords Bankruptcy  Company law  Corporate governance  Creditors  Governance  Limited liability  Shareholder primacy  Stakeholder theory  Suppliers  Trade creditors
Categories (categorize this paper)
ISBN(s)
DOI 10.1007/s10551-011-1190-5
Options
Edit this record
Mark as duplicate
Export citation
Find it on Scholar
Request removal from index
Revision history

Download options

PhilArchive copy


Upload a copy of this paper     Check publisher's policy     Papers currently archived: 61,008
Through your library

References found in this work BETA

Business Ethics.Tom Sorell - 1994 - Butterworth-Heinemann.

View all 8 references / Add more references

Citations of this work BETA

Ethical Issues That Arise in Bankruptcy.Jacques Boettcher, Gerald Cavanagh & Min Xu - 2014 - Business and Society Review 119 (4):473-496.

Add more citations

Similar books and articles

Analytics

Added to PP index
2012-01-07

Total views
29 ( #369,362 of 2,439,447 )

Recent downloads (6 months)
2 ( #282,588 of 2,439,447 )

How can I increase my downloads?

Downloads

My notes