PHIL 322 Lecture Notes - Lecture 29: Stakeholder Theory, Business Judgment Rule

• School: University of Arizona
• Department: Philosophy Main
• Course: PHIL 322
• Professor: ALL

Document Summary

Wednesday, august 23, 2017 r that consistently leads one to believe that 2+2=4 when in fact 2+2=banjo. The separation of risk-bearing and decision-making is the problem; a moral and legal obligation on the part of the agent to act solely in the interest of the principal is the solution. Stakeholder theory is actually immoral inasmuch as it ignores this agency relationship. The corporation is not coextensive with the shareholders. Some have suggested that stakeholder theory provides unscrupulous managers with a ready excuse to act in their own self-interest thus resurrecting the agency problem that the shareholder wealth maximization imperative was de- signed to overcome. Opportunistic managers can more easily act in their own self-interest by claiming that the action actually benefits some stakeholder group or other. First response to this criticism is to point out that no small measure of managerial opportunism has occurred in the name of shareholder wealth maximization.