PHIL201 Lecture Notes - Lecture 8: Stakeholder Theory
6 Jun 2018
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Department
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WEEK 4
Rights of Shareholders:!
Recall Grace & Cohensās objections:"
- How is property holding to be justiļ¬ed?"
- stockholders invest in a risk, a commitment but shareholders who also beneļ¬t indirectly have
not put anything into the business!
Distinct claim:"
- shareholders should be given priority bc:"
- property holders!
-Risk!
-Commitment!
-Direct contribution!
-Obligations to the business!
Shankman:!
Manager have to act only in the interest of the owners,!
ā> owners provided capital for creation of greater wealth!
ā> owners expect from managers to be priority "
Distinct claims for give priority to shareholders:"
- owners"
- ļ¬nancial investment!
-greater risk"
- expect that the business will be run in their interest"
"
"
Whats so special about Shareholders?"
- limited liability !
-No legal responsibility for the activities of corporation!
-Not generally exposed to risks of activities in the community!
-No ļ¬nancial contribution !
-No contribution of labour!
Who owns the corporation?"
Common Claim:"
- shareholders own corporations!
Stout:"
shareholder just own share of stock"
ā> simply contract between shareholder and corporation !
-shareholder have limited rights"
- no diļ¬erence to bondholders suppliers employees"
- None owns the company itself !
Distinct Questions:"
What moral obligations do corporations have to diļ¬er stakeholders, including to society more
generally?"
"
In whose interest should corporations be run and how should corporations be structured?!
Stakeholder Theory:"
Corporate managers have duties to all stakeholders!
ā> must respect their moral rights"
corporations should be run in the interest of all stakeholders !
-also should be structured this way, stakeholder groups a say in operations !
Goodpaster:"
-stakeholder theory threatens traditional idea of private enterprise & private sector!
-Leads to conversion into public institution, blurs traditional goals (no risk taking anymore)!
-Stakeholders should also not be threaten just instrumentally!
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Stockholders invest in a risk, a commitment but shareholders who also bene t indirectly have not put anything into the business. Manager have to act only in the interest of the owners, > owners provided capital for creation of greater wealth. > owners expect from managers to be priority. Expect that the business will be run in their interest. No legal responsibility for the activities of corporation. Not generally exposed to risks of activities in the community. > must respect their moral rights corporations should be run in the interest of all stakeholders. Also should be structured this way, stakeholder groups a say in operations. Stakeholder theory threatens traditional idea of private enterprise & private sector. Leads to conversion into public institution, blurs traditional goals (no risk taking anymore) Stakeholders should also not be threaten just instrumentally. Business managers have morally non signi cant non duciary obligations, based on universal moral obligations.
