SOSC 3040 Lecture 7: notes-sosc-3040- Stakeholder/stockholder
Document Summary
Stockholder theories: executives work for stock (share) holders. Job: to maximize profit while fulfilling legal, contractual and (minimal) moral obligations to other stakeholders (customers, employees, suppliers, etc) Markets respect rights and freedom of all stakeholders. Markets distribute according to contribution; profits reflect capital"s. Executives do in fact act to maximize firms" profits/return on equity. Truth may depend on incentives, economic structures, corporate governance models, etc. Milton friedman (right-wing critic): believes csr violates rights, freedom, democratic process. Shareholders are owners of corporations managers are employees of. Managers have (express or implied) contract with owners (shareholders) to owners (shareholders act as their agents. Agency contract creates open-ended fiduciary duties (to protect/advance principals interest, not just to do/deliver specific x) Left wing critics of csr (bakan) agree with descriptive. Executives ought to prioritize making money for shareholders (profits, return on equity. Managers have non-fiduciary, moral and legal contractual duties to contractual stakeholders.
