This article argues that shareholder primacy cannot be defended on the grounds that there is something special about the position of shareholders that grounds a right to preferential treatment on part of management. The notions of property and contract, traditionally thought to ground such a right, are now widely recognized as incapable of playing that role. This leaves shareholder theorists with two options. They can either abandon the project of arguing for their view on broadly deontological grounds (...) and try to advance consequentialist arguments instead, or they can search for other morally relevant properties that could ground shareholder rights. The most sustained argument in the latter vein is Marcoux’s attempt to show that the vulnerability of shareholders mandates that managers are their fiduciaries. I show that this argument leads to the unacceptable conclusion that it would be unethical for corporations to make incomplete contracts with nonshareholding stakeholders. (shrink)

This paper examines the shareholder primacy norm as a widely acknowledged impediment to corporate social responsibility and explores the role of business schools in promoting the SPN but also potentially as an avenue for change by addressing misconceptions about shareholder primacy and the purpose of business. We start by explaining the SPN and then review its status under US and UK laws and show that it is not a likely legal requirement, at least under the guise (...) of shareholder value maximization. This is in contrast to the common assertion that managers are legally constrained from addressing CSR issues if doing so is inconsistent with the economic interests of shareholders. Nonetheless, while the SPN might be muted as a legal norm, we show that it is certainly evident as a social norm among managers and in business schools—reflective, in part, of the sole voting rights of shareholders on corporate boards and of the dominance of shareholder theory—and justifiably so in the view of many managers and business academics. We argue that this view is misguided, not least when associated with claims of a purported legally enforceable requirement to maximize shareholder value. We propose two ways by which the influence of the SPN among managers might be attenuated: extending fiduciary duties of executives to non-shareholder stakeholders and changes in business school teaching such that it covers a plurality of conceptions of the purpose of the corporation. (shrink)

Shareholders assume risk by investing. Sollars and Tuluca (2018) argue that while this does not justify a managerial policy of shareholder wealth maximization, it does justify compensating shareholders at the oftencalculated cost of equity—the cost that investors require given the level of risk they assume. Here, I show that this can be unfair if the cost of equity is unfair. I then show how shareholder wealth maximization as a managerial imperative is better justified on other grounds.

ABSTRACT:The distinction between what I call nonelective obligations and discretionary obligations, a distinction that focuses on one particular thread of the distinction between perfect and imperfect duties, helps us to identify the obligations that carry over from principals to agents. Clarity on this issue is necessary to identify the moral obligations within “shareholder primacy”, which conceives of managers as agents of shareholders. My main claim is that the principal-agent relation requires agents to fulfill nonelective obligations, but it does (...) not always require discharging discretionary obligations. I show that the requirement to fulfill nonelective obligations is more far-reaching than has been acknowledged by most defenders and critics of shareholder primacy. But I also show that managers are not bound by certain discretionary obligations like charity, showing that their moral obligations are more circumscribed than the obligations that apply to human beings in general. (shrink)

Scholars who favor shareholder primacy usually claim either that managers should not fulfill corporate duties of beneficence or that, if they are required to fulfill them, they do so by going against their obligations to shareholders. Distinguishing between structurally different types of duties of beneficence and recognizing the full force of the normative demands imposed on managers reveal that this view needs to be qualified. Although it is correct to think that managers, when acting on behalf of shareholders, (...) are not required to fulfill wide duties of charity, they are nevertheless required to fulfill a variety of narrow duties of beneficence. What is more, the obligation to fulfill these duties arises precisely because they are acting on behalf of shareholders. As such, this article 1) refines our understanding of the duties of corporate beneficence and 2) helps to identify which duties of beneficence are imposed on managers when they are acting on behalf of shareholders. (shrink)

Strudler rejects shareholder primacy and argues that, once contractual obligations have been fulfilled and shareholders have received a reasonable return on investment, corporate executives may use corporate wealth for the general good. He seeks to establish this claim via an argument that, contrary to the received view, shareholders do not own corporations. After raising some questions about the latter argument, this commentary goes on to argue that the question of corporate ownership is a red herring. The argument for (...) shareholder primacy that Strudler wants to reject does not rely on the premise that shareholders own the firm. (shrink)

ABSTRACT:Many scholars and managers endorse the idea that the primary purpose of the firm is to make money for its owners. This shareholder wealth maximization objective is justified on the grounds that it maximizes social welfare. In this article, the first of a two-part set, we argue that, although this shareholder primacy model may have been appropriate in an earlier era, it no longer is, given our current state of economic and social affairs. To make our case, (...) we employ a utilitarian moral standard and examine the apparent logical sequence behind the link between shareholder wealth maximization and social welfare. Upon close empirical and conceptual scrutiny, we find that utilitarian criteria do not support the shareholder model; that is, shareholder wealth maximization is only weakly linked to social welfare maximization. In view of the dubious validity of this sequential argument, we outline some of the features of a superior corporate objective—a variant of normative stakeholder theory. In the second article, we will advance and defend our preferred alternative and then discuss some institutional arrangements under which it could be implemented. (shrink)

In response to the growing criticisms to shareholder primacy, Oliver Hart, a Nobel Economics Prize recipient, and Luigi Zingales, a very well-known finance professor, have offered a revision to Milton Friedman’s dominant account. Seeking to incorporate social and moral concerns into the objective function of the firm, they have proposed that managers should maximize shareholder welfare instead of shareholder value. Their account has been highly influential and reflects many of the substantive and methodological assumptions of corporate (...) governance scholars within the law and economics literature. In this paper, we engage closely with their account from a normative perspective, unearthing and criticizing the implications of many of these assumptions. In doing so, we also formulate a set of principles necessary to ensure the ethical legitimacy of any proposal that puts shareholders at the center of the firm’s objective function. (shrink)

The paper introduces a virtue-theoretic critique of recent “prosocial” revisions of shareholder primacy. The paper aims at widening the scope of virtue-based business ethics beyond its nearly exclusive focus on the character and virtue of managers, employees, and organizations. In contrast to MacIntyre-inspired research, the paper takes a “good intentions” approach that looks squarely at shareholders, regarding them as real people (not algorithms or institutions) occupying distinctive roles as principals of firms who are, ideally, virtuous moral agents. It (...) is argued that virtue ethics can play a part in questioning normative features of shareholder primacy and the objective function of the firm. Probing deeper than prudential and instrumental concerns, the paper poses normative questions about interpreting shareholder motivations: what _ought_ shareholders to prefer/want/desire?; _ought_ shareholders to desire profit maximization versus profit satisficing?; _ought_ shareholders to prefer other, prosocial goals, alongside of wealth?; should self-interested motivation in profit-seeking be considered virtuous? To lend focus, the paper taps Hart and Zingales’ recently revised “pro-social” version of shareholder primacy, as well as Munger and Russell’s analysis of “virtuous profit-seekers,” as normative frames of reference. Doing so enables a critical engagement with their respective accounts from the standpoint of virtue theory. Taking a “virtuous shareholders” perspective provides an aretaic standpoint, one that is appropriate, given that shareholders care about matters of justice and the common good. Shareholders are not simply concerned about making money. Hence it is the moral intentions and motivations of ideally virtuous shareholders which ought to modulate the profit-seeking activities of shareholders in accordance with maximizing their welfare. (shrink)

Kenneth Silver criticizes our use of the Capital Asset Pricing Model to determine the return on investment that is deserved by shareholders, and suggests shareholder primacy follows from the principal/agent model, rather than a concern for risk. We argue that Silver has misunderstood CAPM and our use of it, and that, under current law, more is required from articles of incorporation or corporate bylaws for the principal/agent model to apply to corporations.

In a series of articles, Thomas Dunfee defended the view that managers are permitted and at times, required, to utilize corporate resources to alleviate human misery even if this is at the expense of shareholder interests. In this article, I summarize Dunfee's defense of this view, raise some questions about his account and propose ways in which to answer these questions. The aim of this article is to highlight one of Dunfee's contributions to the debate about corporate governance and (...) corporate responsibility. (shrink)

ABSTRACT:The primacy of shareholder demands in the traditional theory of the firm has typically excluded marginalised stakeholder voices. However, shareholders involved in social shareholder engagement purport to bring these voices into corporate decision-making. In response to ethical concerns about the legitimacy of SSE, we use the lens of discourse ethics to provide a normative analysis at both action and constitutional levels. By specifying three normative questions, we extend the analysis of SSE to identify a political role for (...) shareholders in pursuit of the common good. We demonstrate the desirability for SSE to promote regulatory/institutional change to guarantee marginalised stakeholders a voice in corporate decisions that affect them. The theory of SSE we propose thus calls into question the stark separation of the political and economic spheres and reveals an underlying tension, often overlooked, within the responsible investment literature. (shrink)

This paper proposes a description of the moral obligations of economic agents. It will show that a threefold division should be adopted to distinguish moral obligations applying to their interactions in the market, obligations applying to their interactions inside business firms and obligations applying to their interactions with agents outside the market. Competition might be permissible in the first case since markets are special patterns of social interactions (called adversarial schemes). They produce their benefits when agents try to satisfy exclusive (...) preferences at the expense of others. However, moral obligations inside the firm and moral obligations outside the market are of a different nature. This argument will be developed in the two first parts of this paper. In the third part, it will outline the relevant strengths of that account in relation with two popular views of economic agents’ moral obligations: the shareholder primacy view and the stakeholder theory. (shrink)

Henry Hansmann has claimed we have reached the “end of history” in corporate law, organized around the “widespread normative consensus that corporate managers should act exclusively in the economic interests of shareholders.” In this paper, I examine Hansmann’s own argument in support of this view, in order to draw out its implications for some of the traditional concerns of business ethicists about corporate social responsibility. The centerpiece of Hansmann’s argument is the claim that ownership of the firm is most naturally (...) exercised by the group able to achieve the lowest agency costs, and that homogeneity of interest within the ownership group is the most important factor in achieving lower costs. He defends this claim through a study of cooperatives, attempting to show that homogeneity is the source of the competitive advantage most often enjoyed by shareholders over other constituency groups, such as workers, suppliers and customers, when it comes to exercising control over the firm. Some business ethicists, impressed by this argument, have taken it to be a vindication of Milton Friedman’s claim that profit-maximization is the only “social responsibility” of management. I would like to suggest that this conclusion does not follow, and that the “Hansmann argument” lends itself to a less minimalist view, what I refer to as a “market failures” approach to business ethics. (shrink)

ABSTRACT:Employing utilitarian criteria, Jones and Felps, in “Shareholder Wealth Maximization and Social Welfare: A Utilitarian Critique” (Business Ethics Quarterly23[2]: 207–38), examined the sequential logic leading from shareholder wealth maximization to maximal social welfare and uncovered several serious empirical and conceptual shortcomings. After rendering shareholder wealth maximization seriously compromised as an objective for corporate operations, they provided a set of criteria regarding what a replacement corporate objective would look like, but do not offer a specific alternative. In this (...) article, we draw on neo-utilitarian thought to advance a refined version of normative stakeholder theory that we believe addresses a major remaining criticism of extant versions, their lack of specificity. More particularly, we provide a single-valued objective function for the corporation—stakeholder happiness enhancement—that would allow managers to make principled choices between/among policy options when stakeholder interests conflict. (shrink)

Ethics for Capitalists offers an accessible, comprehensive statement of the Market Failures Approach to business ethics. While the competitive context of the market economy provides economic actors greater freedom to pursue their interests, it also imposes moral constraints on the range of strategies they may employ. The pursuit of profit must be consistent with the overall objective of market institutions, which is to promote efficiency in the production and allocation of goods and services. Ethics for Capitalists draws out the implications (...) of this view for business strategy, corporate governance, managerial authority, and shareholder primacy. (shrink)

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. (shrink)

This article explores how corporate governance processes and structures are being used in large Australian companies to develop, lead and implement corporate responsibility strategies. It presents an empirical analysis of the governance of sustainability in fifty large listed companies based on each company’s disclosures in annual and sustainability reports. We find that significant progress is being made by large listed Australian companies towards integrating sustainability into core business operations. There is evidence of leadership structures being put in place to ensure (...) that board and senior management are involved in sustainability strategy development and are then incentivised to monitor and ensure implementation of that strategy through financial rewards. There is evidence of a willingness to engage and communicate clearly the results of these strategies to interested stakeholders. Overall, there appears to be a developing acceptance amongst large corporations that efforts towards improved corporate sustainability are not only expected but are of value to the business. We suggest that this is evidence of a managerial shift away from an orthodox shareholder primacy understanding of the corporation towards a more enlightened shareholder value approach, often encompassing a stakeholder-orientated view of business strategy. However, strong underlying tensions remain due to the insistent market emphasis on shareholder value. (shrink)

This paper examines the role of vulnerability in the basis of business ethics by criticizing its role in giving a moral substantial character to fiduciary duties to shareholders. The target is Marcoux’s (Bus Ethics Q 13(1):1–24, 2003) argument for morally substantial fiduciary duties vis-à-vis the multifiduciary stakeholder theory. Rather than proceed to support the stakeholder paradigm, a conception of vulnerability is combined with Heath’s 2004) “market failure” view of the ethical obligations of managers as falling out of their roles as (...) professionals involved in the institution of the market. The result is the core of a theoretically defensible and managerially motivating and deployable ethic. (shrink)

Based on the concept of shareholder primacy, many scholars have argued that it is more important for businesses to earn profits for their shareholders than to provide benefits to society at large. Corporate social responsibility is often regarded as an investment that comes at the expense of shareholders. In contrast, research analyzing the connections between the equity ownership structure of a company and its level of CSR engagement suggests that CSR offers benefits to shareholders that go beyond direct (...) financial returns from investments. This study provides a comprehensive review and systematic assessment of theoretical considerations and approaches regarding different forms of equity ownership and their relationships to CSR, and it discusses the relevant benefits and motivations of shareholders. The perceived value of these CSR benefits varies among different types of shareholders, as they assign unequal values to short-term financial or to rather long-term CSR benefits. Based on a literature sample of 146 publications, this review demonstrates central problems inherent in previous analyses. Given the ambiguous and partially contradictory findings of prior research, this study identifies potential moderating influences that help clarify empirical evidence. A contingency approach is suggested in future research, as this can help resolve the problem of contradictory empirical findings and theoretical arguments. (shrink)

In the wake of the most recent financial crisis, corporations have been criticized as being self-interested and unmindful of their relationship to society. Indeed, the blame is sometimes placed on the corporate legal form, which can exacerbate the tension between duties to shareholders and interests of stakeholders. In comparison, the Benefit Corporation (BC) is a new legal business entity that is obligated to pursue public benefit in addition to the responsibility to return profits to shareholders. It is legally a for-profit, (...) socially obligated, corporate form of business, with all the traditional corporate characteristics combined with societal responsibilities. Considering the history and perception of shareholder primacy in United States law, it is argued that this new business structure is an ethical step toward empowering socially committed commercial entities. The contribution of this research is to provide a fundamental base of knowledge about the new legal form of business, the BC, upon which further study may rely. First, the legal history of the corporation is briefly reviewed in order to provide context to the relationship of the corporate form to society, including exploration of the premise that shareholder wealth maximization is its best and only purpose. Second, the BC is described in detail, and state statutes are compared. Third, the BC is placed within the context of corporate social responsibility. Finally, opportunities for future research are discussed. (shrink)

In the wake of Citizens United v. the Federal Elections Commission, more companies are spending heavily on political speech, but the moral implications of doing so are not clear. Few business ethicists have directly addressed the moral legitimacy of corporate political speech and the conditions under which it may be morally permissible. My goal here is to outline the moral hazards associated with engaging in corporate political speech. I argue that whether one takes a narrow Friedman-style shareholder primacy (...) view of managerial duty, a broader stakeholder view, or an even more wide-ranging political corporate social responsibility view of the moral duties of business, various moral hazards must be taken into account in determining the moral legitimacy of corporate political speech. I discuss a number of moral hazards endemic to corporate political speech and suggest ways in which business practitioners might avoid those moral hazards. (shrink)

Jay Coen Gilbert, co-founder of B Lab, discusses his vision for a “new economy” where business is a “force for good.” In this interview, Coen Gilbert provides an overview of how B Lab’s various initiatives—Certified B Corporations, the B Impact Assessment, B Analytics, GIIRS, and Benefit Corporations—function interdependently to accelerate a culture shift to redefine success in business. Coen Gilbert then focuses on the role of benefit corporations in this larger movement. The benefit corporation is a new legal form of (...) business that requires a corporate purpose dedicated to “general public benefit” and the delivery of demonstrable “material positive impact on society and the environment.” Novel fiduciary and reporting requirements differentiate the benefit corporation from the traditional corporation founded on shareholder primacy. Coen Gilbert explains how the benefit corporation is better suited to create long-term shareholder value as well as sustainable value for society, the environment, and other stakeholders. He addresses critiques of and challenges to the benefit corporation as an agent of change for business. (shrink)

In ways accentuated by the global coronavirus pandemic, corporations constitute vital instruments of the acts of beneficence needed by the people of the world to make progress in public health and increase collective and individual well-being. This article contributes to understanding the variety of moral forces that may lead corporations to commit acts of beneficence, including Friedman’s business case for corporate beneficence, the duty of beneficence as developed by business ethicists, and Dunfee’s social contract account of corporate obligation. Whereas Mejia (...) recently contributed to scholarship on corporate beneficence by expressly adopting shareholder primacy’s conception of corporate governance, this article embraces a stakeholder-oriented, managerialist picture of corporate governance. I extend the literature on beneficence by incorporating what I argue is the intuition underlying Dunfee’s contractualist formula of minimal contribution, namely that management’s duty to do good is awakened and unshackled to the extent management judges the corporation can afford to commit acts of beneficence, all stakeholders considered. The all-stakeholders-considered case for corporate beneficence compels management to act, I argue, when inaction would undermine the moral integrity of managers personally committed to promoting the well-being of humanity. (shrink)

Shareholders with standard monetary preferences will give a manager incentives to increase firm profits, which can be achieved with equity grants. When shareholders are socially responsible, in the sense that they also value corporate social performance, it is not clear which incentives the manager should receive. Yet, in a standard principal–agent model, we show that the optimal contract is surprisingly simple: it consists in giving equity holdings to the manager. This is notably because the stock price will incorporate expected profits (...) as well as the social performance of the firm, to the extent that it is valued by shareholders. Consequently, equity holdings give the manager incentives to jointly maximize the profits and the social performance of the firm according to shareholders’ preferences. To facilitate alignment of interests, more socially responsible firms will optimally hire more socially responsible managers. We conclude that neither the shareholder primacy model nor equity-based managerial compensation is necessarily inconsistent with the attainment of social objectives. (shrink)

The primary appeal of stakeholder theory in business ethics derives from its promise to help solve two large and often morally difficult problems: (1) how to manage people fairly and efficiently and (2) how to determine the extent of a firm's moral responsibilities beyond its obligations to enhance its profits and economic value. This article investigates a variety of conceptual quandaries that stakeholder theory faces in addressing these two general problems. It argues that these quandaries pose intractable obstacles for stakeholder (...) theory which prevent it from delivering on its large promises. Acknowledging that various versions of stakeholder theory have made a contribution in elucidating the complex nature of firms and business decision making, the article argues that it is time to move on. More precise explications of the nature of modern firms focusing on the application of basic moral principles to different business contexts and situations are likely to prove more accurate and useful. (shrink)

Markets, just like states, are systems of governance. Their justification must therefore meet similar standards of moral scrutiny, despite the fact that their authority structure is impersonal. In order to argue for the role of markets as systems of governance that raise similar justificatory burdens, this book provides a philosophical account of market institutions. According to this view, shared social institutions define a framework for how members of a political community think and act toward one another, consistent with citizens respecting (...) themselves and one another as free persons, each entitled to guide their activities in light of their own judgments. The market is one of these shared institutions, so its rules must also be consistent with mutual respect as free persons. This perspective represents a fundamentally different way of thinking about economic life, which rejects both the view of economic actors as disconnected individuals in a state of nature and the view of economic actors as mere preference orderings that are inputs to a giant social welfare function. The book formulates a deeper framework for thinking about economic life, which can displace the familiar ideas that underpin contemporary neoliberalism and finance capitalism. In so doing, the book works out the implications of the idea that the burdens of equal citizenship extend to economic life, such that appropriately regulated markets and workplaces elicit and realize a system in which people respect one another as free. The book concludes with a defense of economic democracy, elements of which can be found under German codetermination. (shrink)

This article addresses the issue of moral compunction among a sample of senior managers set against the background of their routine organizational participation. In considering what factors influence their moral sensibilities these managers were interviewed using an approach designed to elicit their perceptions concerning both the ethical and commercially imperative dimensions of their working lives. The qualitative data resulting from this inquiry, while tentative, indicates the primacy of the normative appeal of shareholder value, conditioned by the exigencies of (...) engagement in corporate bureaucracies, including the maintenance of career and livelihood responsibilities. These conclusions indicate the magnitude of the obstacle that the normative business ethics project requires to overcome in order to fulfil its promise. (shrink)

This article addresses the issue of moral compunction among a sample of senior managers set against the background of their routine organizational participation. In considering what factors influence their moral sensibilities these managers were interviewed using an approach designed to elicit their perceptions concerning both the ethical and commercially imperative dimensions of their working lives. The qualitative data resulting from this inquiry, while tentative, indicates the primacy of the normative appeal of shareholder value, conditioned by the exigencies of (...) engagement in corporate bureaucracies, including the maintenance of career and livelihood responsibilities. These conclusions indicate the magnitude of the obstacle that the normative business ethics project requires to overcome in order to fulfil its promise. (shrink)

A shift in the cultural conception of the firm as productionsystem to that as investment-system entrenches the institutional logic of agency theory in governance reform. Reform initiatives emphasize the separation between management and the board, forensic reporting requirements, and the primacy of shareholders' entitlement to control and residual gains. Problems associated with this agency logic render reform unable to deliver a broad-based ethical operating environment. The introduction of a version of stakeholder theory, augmented by Knightian uncertainty, places the development (...) of an alternative conception of the firm into discourse. Implications for governance reform are considered. (shrink)

The well-being of generations yet to come must necessarily be an important concern for the present. As an extension of Rawls’ ‘just savings’ principle, one of the arguments for sustainable development is that of intergenerational equity—the idea that future generations must have the same access to natural resources as the present generation. In this article, I attempt to reconcile the divergent positions of the shareholder and stakeholder primacy debate by proposing that directors—acting for the corporation—should preserve intergenerational equity. (...) Three arguments are presented in course of this proposition. Firstly, corporations are perpetual in nature and their continuing existence is predicated upon the ability of individual owners to transfer their ownership. Second, directors have a higher fiduciary duty to the corporation and future shareholders, over that of present shareholders. Finally, in order to safeguard the interests of future shareholders, corporations must necessarily strive to preserve the natural and social environments upon which the future of the corporation and the wealth of future shareholders depend. (shrink)

The well-being of generations yet to come must necessarily be an important concern for the present. As an extension of Rawls’ ‘just savings’ principle, one of the arguments for sustainable development is that of intergenerational equity—the idea that future generations must have the same access to natural resources as the present generation. In this article, I attempt to reconcile the divergent positions of the shareholder and stakeholder primacy debate by proposing that directors—acting for the corporation—should preserve intergenerational equity. (...) Three arguments are presented in course of this proposition. Firstly, corporations are perpetual in nature and their continuing existence is predicated upon the ability of individual owners to transfer their ownership. Second, directors have a higher fiduciary duty to the corporation and future shareholders, over that of present shareholders. Finally, in order to safeguard the interests of future shareholders, corporations must necessarily strive to preserve the natural and social environments upon which the future of the corporation and the wealth of future shareholders depend. (shrink)

This book is the result of the first SEEP (Studies in Economic Ethics and Philosophy) conference that was held in Asia. First, the Western tradition is reinterpreted and restated by the two editors with their diversified perspective of virtue ethics and communicative ethics. Then, new approaches such as "critical realism", "reciprocal delivery", "evolutionary thought" and "cultural studies" are applied to understand ethical problems in economics. Further, in contrast to the reassessment of Scottish moral philosophy and German Romanticism, Chinese, Japanese, and (...) Korean ethical thinking is examined under the modern perspective. This book does not miss the reflections on current problems around the penetration of corruption and the primacy of shareholders' value in the field of business. (shrink)

Shareholder activism has been largely neglected in the few available studies on corporate governance in sub Saharan Africa. Following the recent challenges posed by the Cadbury Nigeria Plc, this paper examines shareholder activism in an evolving corporate governance institutional context and identifies strategic opportunities associated with shareholders’ empowerment through changes in code of corporate governance and recent developments in information and communications technologies in Nigeria; especially in relation to corporate social responsibility in Nigeria. It is expected that the (...) paper would contribute to the scarce literature on corporate governance and accountability in Africa. (shrink)

This article draws on the moral philosophy of Immanuel Kant to explore whether a corporate ‘duty of beneficence’ to non-shareholders is consistent with the orthodox ‘shareholder theory’ of the firm. It examines the ethical framework of Milton Friedman’s argument and asks whether it necessarily rules out the well-being of non-shareholders as a corporate objective. The article examines Kant’s distinction between ‘duties of right’ and ‘duties of virtue’ (the latter including the duty of beneficence) and investigates their consistency with the (...) shareholder theory. The article concludes that it is possible within the ethical framework of shareholder theory for managers to pursue directly the happiness of non-shareholders. Furthermore, shareholders have a duty to hold management to account for the moral consequences of the firm’s activities on non-shareholding stakeholders. (shrink)

The primary objective of this article is to develop a framework for analyzing the ethical foundations and implications of shareholder wealth maximization (SWM). Distinctions between SWM and the more widely examined construct of profit maximization are identified, the most significant being the central role played in SWM by the market mechanism for pricing the corporation''s securities. It is argued that empirical tests concerned with evaluating the ethical implications of SWM will almost surely involve a joint hypothesis. A number of (...) recent empirical studies aimed at testing hypotheses with explicit ethical content are reviewed. (shrink)

How does history relate to the past? According to leading historical theorists, the relation to the past in history is reducible to evidential, psychological, practical and retrospective concerns. In contrast, this volume claims that historical relations to the past are irreducible products of the logical commitments of history as method. Ahlskog argues that the method of history shapes and enables relations to past in historical research by invoking past perspectives of meaning for rendering reality intelligible. The book provides a much-needed (...) philosophical clarification of key concepts in one of the most fundamental debates within the humanities today. (shrink)

The article presents an analysis and critique of Milton Friedman’s argument that the social responsibility of business is merely to increase its profits. The analysis uncovers a central claim that Friedman implies, but does not explicitly defend, namely that the shareholders of a corporation have no duty to direct that corporation’s management to exercise social responsibility. An argument against this claim is then advanced by way of a convergence strategy, whereby multiple influential moral approaches are shown to align themselves against (...) Friedman. The convergence strategy shows that Friedman’s position lies on the lonely fringes of Western moral thought, and that at least some of Friedman’s professed adherents appear to offer incoherent moral views. The convergence strategy is shown to suggest, but not entail, a stakeholder model of the corporation. The article concludes by considering two objections. (shrink)

Institutional investors are increasingly becoming active owners through voting their shares and engaging in dialogue with investee companies to improve corporate environmental, social and corporate governance (ESG) performance. This article applies a model of stakeholder salience to the shareholder context, analysing the attributes of power, legitimacy and urgency, to determine the factors that are likely to enhance shareholder salience. It is found that a strong business case and the values of the managers of investee companies are likely to (...) be the most important contributors to shareholder salience. (shrink)

I argue for the primacy of the mental from recent physicalists’ endorsements of phenomenal transparency and the non-transparency of the physical. I argue that the conjunction of these views shows that (1) arguments for dualism from introspection are difficult to resist; and (2) a kind of Hempel’s dilemma that removes constraints that block substance dualism. This shows that (1) raises the probability of the primacy of the mental, while (2) lowers the probability of the primacy of the (...) physical. Lastly, I argue that the conjunction of (1) and (2) raise the probability of substance dualism. (shrink)

The question of the relation between the collective and the individual has had a long but patchy history within both philosophy and psychology. In this chapter we consider some arguments that could be adopted for the primacy of the we, and examine their conceptual and empirical implications. We argue that the we needs to be seen as a developing and dynamic identity, not as something that exists fully fledged from the start. The concept of we thus needs more nuanced (...) and differentiated treatment than currently exists, distinguishing it from the idea of a ‘common ground’ and discerning multiple senses of ‘we-ness’. At an empirical level, beginning from the shared history of human evolution and prenatal existence, a simple sense of pre-reflective we-ness, we argue, emerges from second-person I-you engagement in earliest infancy. Developmentally, experientially and conceptually, engagement remains fundamental to the we throughout its many forms, characterized by reciprocal interaction and conditioned by the normative aspects of mutual addressing. (shrink)

We study behind-the-scenes investor activism promoting environmental, social, and governance improvements by means of a proprietary dataset of a large international, socially responsible activist fund. We examine the activist’s target selection, forms of engagement, impact on ESG performance, drivers of success, and effects on the targets’ operations and value creation. Target firms are typically large and visible, perform well, and have high liquidity and low ESG performance. Engagement induces ESG rating adjustments: firms with poor ex ante ESG ratings experience a (...) ratings increase after complying with the activist’s demands, whereas firms with high ex ante ESG ratings experience a ratings decrease following the revelation of their ESG problems. Activism that is focused on environmental and social issues is more likely to succeed if targets are ESG-sensitive. Successful engagements boost targets’ sales. Risk-adjusted excess stock returns of successful engagements outperform those of unsuccessful engagements by 2.7%. Results are especially strong for firms with low ex ante ESG scores. Specifically, targeted firms in the lowest ex ante ESG quartile outperform matched peers by 7.5% in the year after the end of the engagement. Our results thus suggest that the activism regarding corporate social responsibility generally improves ESG practices and corporate sales and is profitable to the activist. Taken together, we provide direct evidence that ethical investing and strong financial performance, both from the activist’s and the targeted firm’s perspective, can go hand-in-hand together. (shrink)

This paper contrasts the normative foundations of the stakeholder and shareholder theories of the firm. It demonstrates how the shareholder theory of the firm appears to have at least as much normative support as stakeholder theory and suggests that a way forward may be for a variant of pure shareholder theory to emerge.

This article advances the idea that shareholders who seek to influence corporate behaviour can be understood analytically as norm entrepreneurs. These are actors who seek to persuade others to adopt a new standard of appropriateness. The article thus goes beyond studies which focus on the influence of shareholder activism on single instances of corporate conduct, as it recognises shareholders' potential as change agents for more widely shared norms about corporate responsibilities. The article includes the empirical example of US internet (...) technology companies who, in their Chinese operations, face conflicts of norm systems in regard to freedom of expression on the internet. Shareholders have been active in seeking to persuade these companies to adopt a norm of adhering to global standards for human rights over restrictions implied by authoritarian regimes to which they deliver services. (shrink)

This paper contrasts the normative foundations of the stakeholder and shareholder theories of the firm. It demonstrates how the shareholder theory of the firm appears to have at least as much normative support as stakeholder theory and suggests that a way forward may be for a variant of pure shareholder theory to emerge.

The Primacy of God, the notion of justice toward God is seldom considered and often foreign. Far more discussed is how God might either undermine or motivate social justice. The Primacy of God by R. Jared Staudt offers an important intervention. With the aid of St. Thomas Aquinas, Staudt argues that it is vital for both contemporary society and contemporary Catholic theology to return to the traditional view of God as the one to whom all human and social (...) action must be ordered and to recover the virtue of religion as the virtue which orders all other virtues to God. Not only does Staudt helpfully remind readers of the ancient philosophical and biblical notion of worship as a dictate of the natural law, he also illuminates the way in which Christian liturgy, as an enactment of Christ's high priesthood, is the great fulfillment of natural and biblical worship. Accordingly, Staudt secures religion as essential for the virtue of love. This brings Staudt to criticize modern theologians like Karl Barth, who claimed that religion is inherently idolatrous, as well as Karl Rahner, who claimed that love of neighbor is the highest moral act. Staudt also considers the question of religious truth in light of the plurality of religions, soliciting the assistance of Hans Urs von Balthasar and Joseph Ratzinger, as well as the way in which religion relates to the development of culture, engaging the great Catholic social historian Christopher Dawson. The Primacy of God is a much-needed work that ought to set the agenda for Catholic theology in the twenty-first century. (shrink)

The question of whether, and to what extent, business managers have obligations to stakeholders has been the principal theme in much of recent business ethics literature. The question of whether shareholders have obligations to stakeholders, however, has not been addressed sufficiently. I provide some needed attention to this matter by examining the positions of shareholders in the contemporary world of investing. Their positions are considerably different than that often envisioned by business ethicists and economists where shareholders determine the directions of (...) corporate activities through their voting decisions. Typical contemporary investors rarely control corporate activities. If they own corporate securities directly, generally they own too small an interest to exercise control. And, in most cases, they do not even own corporate securities directly, but, rather, own shares in funds. Because of the positions of shareholders today, it is highly questionable whether most have obligations to stakeholders. This has a significant implication for business managers. Whether or not shareholders have obligations to stakeholders, business managers have a greater obligation to educate shareholders about how corporate activities affect stakeholders. I provide a justification for that obligation and comment on how business managers might begin to fulfill it. (shrink)

This paper contrasts the normative foundations of the stakeholder and shareholder theories of the firm. It demonstrates how the shareholder theory of the firm appears to have at least as much normative support as stakeholder theory and suggests that a way forward may be for a variant of pure shareholder theory to emerge.