Abstract
From an agency theory perspective (Fama, 1980; Fama & Jensen, 1983; see Lan & Heracleous, 2010, for a recent review), shareholder empowerment can be seen as a means of enhancing the balance of power between owners and managers, controlling managerial power, reducing the effects of information asymmetries, and keeping agency costs in check (Bebchuk, 2005). Critics of this view argue that changing regulatory arrangements (including shareholders’ voting rights and decision influence) would have unanticipated negative effects. Concerns include the introduction of inefficiencies in corporate governance and uncertainty as to how shareholders would be held accountable for their decision influence (Bainbridge, 2006; Bratton & Wachter, 2009; Sharfman, 2012). The equivocal outcomes of shareholder activism on both firm performance and shareholder returns (Goranova & Ryan, 2014) make an evaluation of the desirability of shareholder empowerment even more complex.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
References
Bainbridge, S. 2006. Director primacy and shareholder disempowerment. Harvard Law Review, 119: 5–25.
Beadle, R., and Knight, K. 2012. Virtue and meaningful work. Business Ethics Quarterly, 22(2): 433–450.
Bebchuk, L. A. 2005. The case for increasing shareholder power. Harvard Law Review, 118: 833–914.
Bebchuk, L. A. 2007. The myth of the shareholder franchise. Virginia Law Review, 93: 675–732.
Bratton, W. W., and Wachter, M. L. 2009. The case against shareholder empowerment. University of Pennsylvania Law Review, 158: 653–728.
Crisp, R., and Slote, M. A. (Eds.). 1997. Virtue ethics. Oxford: Oxford University Press. Dierksmeier, C. 2013. Kant on virtue. Journal of Business Ethics, 113(4): 597–609.
Fama, E. F. 1980. Agency problems and the theory of the firm. Journal of Political Economy, 88: 288–307.
Fama, E. F., & Jensen, M. C. 1983. Separation of ownership and control. Journal of Law and Economics, 26: 301–325.
Fontrodona, J., Sison, A. J. G., and de Bruin, B. 2013. Editorial introduction: Putting virtues into practice. A challenge for business and organizations. Journal of Business Ethics, 113(4): 563–565.
Friedman, M. 1970. The social responsibility of business is to increase its rofits. New York Times Magazine, September 13. Georgeson. 2013. Annual corporate governance review. Available online at http://www.computershare-na.com/sharedweb/georgeson/acgr/acgr2013.pdf.
Goranova, M., & Ryan, L. V. 2014. Shareholder activism: A multidisciplinary review. Journal of Management, 80: 1230–1268.
Guillemin, M., & Gillam, L. 2004. Ethics, reflexivity and “ethically important moments” in research. Qualitative Inquiry, 10: 261–280.
Habermas, J. 1970. Towards a theory of communicative competence. Inquiry, 13(1–4): 360–375.
Jacobs, C., & Heracleous, L. 2005. Answers for questions to come: Reflective dialogue as an enabler of strategic innovation. Journal of Organizational Change Management, 18: 338–352.
Lan, L. L., & Heracleous, L. 2010. Rethinking agency theory: The view from law. Academy of Management Review, 35: 294–314.
Mill, J. S. 1987. Utilitarianism. In A. Ryan (Ed.), Utilitarianism and other essays. London: Penguin.
MacIntyre, A. 1984a. After virtue. 2nd ed. London: Duckworth.
Maclntyre, A. 1984b. Does applied ethics rest on a mistake? Monist, 67(4): 498–513.
MacIntyre, A. 1988. Whose justice? Which rationality? London: Duckworth.
McCracken, J., Martin, W., & Shaw, B. 1998. Virtue ethics and the parable of the sadhu. Journal of Business Ethics, 17(1): 25–38.
Morrell, K. 2004. Decision making and business ethics: The implications of using image theory in preference to rational choice. Journal of Business Ethics, 50(3): 239–52.
Morrell, K. 2012. Organization, society and politics: An Aristotelian perspective. London: Palgrave.
Morrell, K., & Brammer, S. 2014. Governance and virtue: The case of public order police. Journal of Business Ethics. DOI: 10.1007/s10551-014-2522-z.
New York Stock Exchange. 2014. Listed company manual. http://nysemanual.nyse.com/LCM/Sections/. Accessed June 30, 2014.
Nussbaum, M. C. 2001. The fragility of goodness. Revised ed. Cambridge: Cambridge University Press.
Sellar, W. C., and Yeatman, R. J. 1958. 1066 and all that: A memorable history of England, comprising all the parts you can remember, including 103 good things, 5 bad kings and 2 genuine dates. London: Methuen.
Sharfman, B. S. 2012. What’s wrong with shareholder empowerment? Journal of Corporation Law, 37(4): 903–909.
Sjostrom, E. 2010. Shareholders as norm entrepreneurs for corporate social responsibility. Journal of Business Ethics, 94: 177–191.
Slote, M. 1997. The virtue in self-interest. Social Philosophy and Policy, 14: 264–285.
Solomon, R. C. 2004. Aristotle, ethics and business organizations. Organization Studies, 25(6): 1021–1043.
Stout, L. A. 2012. New thinking on “shareholder primacy.” Accounting, Economics, and Law, 2(2): article 4.
Editor information
Copyright information
© 2015 Kevin Morrell and Loizos Heracleous
About this chapter
Cite this chapter
Morrell, K., Heracleous, L. (2015). Is Shareholder Empowerment a “Good Thing”?. In: Goranova, M., Ryan, L.V. (eds) Shareholder Empowerment. Palgrave Macmillan, New York. https://doi.org/10.1057/9781137373939_3
Download citation
DOI: https://doi.org/10.1057/9781137373939_3
Publisher Name: Palgrave Macmillan, New York
Print ISBN: 978-1-137-37644-2
Online ISBN: 978-1-137-37393-9
eBook Packages: Palgrave Business & Management CollectionBusiness and Management (R0)