Nordberg, Donald (2007) Ethics of corporate governance. Working Paper. Centre for Board Effectiveness, Henley Management College.
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Official URL: http://ssrn.com/abstract=1004038
How should corporate directors determine what is the right decision? For at least the past 30 years the debate has raged as to whether shareholder value should take precedence over corporate social responsibility when crucial decisions arise. Directors face pressure, not least from ethical investors, to do the good thing when they seek to make the right choice. Corporate governance theory has tended to look to agency theory and the need of boards to curb excessive executive power to guide directors' decisions. While useful for those purposes, agency theory provides only limited guidance. Supplementing it with the alternatives - stakeholder theory and stewardship theory - tends to put directors in conflict with their legal obligations to work in the interests of shareholders. This paper seeks to reframe the discussion about corporate governance in terms of the ethical debate between consequential, teleological approaches to ethics and idealist, deontological ones, suggesting that directors are - for good reason - more inclined toward utilitarian judgments like those underpinning shareholder value. But the problems with shareholder value have become so great that a different framework is needed: strategic value, with an emphasis on long-term value creation judged from a decidedly utilitarian standpoint.
|Item Type:||Monograph (Working Paper)|
|Additional Information:||Paper presented at the 10th International Conference on Corporate Governance and Board Leadership, 2-4 October 2007, Centre for Board Effectiveness, Henley Management College|
|Research Community:||University of Westminster > Westminster Business School|
|Deposited On:||09 Mar 2010 16:23|
|Last Modified:||09 Mar 2010 16:23|
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