Corporate governance : the role of other constituencies ; paper presented at the Conference on Workable Corporate Governance: Cross Border Perspectives, held in Paris, March 17-19, 1997

  • Paper Presented at the Conference on Workable Corporate Governance: Cross-Border Perspectives held in Paris, March 17-19, 1997 To appear in: A. Pezard/J.-M. Thiveaud: Workable Corporate Governance: Cross-Border Perspectives, Montchrestien, Paris 1997. The paper discusses the role of various constituencies in the corporate governance of a corporation from the perspective of incomplete contracts. A strict shareholder value orientation in the sense of a rule that at any time firm decisions should be made strictly in the interest of the present shareholders would make it difficult for the firm to establish long-term relationships as the potential partners would have to fear that, at a later stage of the co-operation, the shareholders or a management acting only on their behalf could exploit them because of the inevitable incompleteness of long-term contracts. One way of mitigating these problems is to put in place a corporate governance system which gives some active role to the other stakeholders or constituencies, or which makes their interests a well-defined element of the objective function of the firm. A commitment not to follow a policy of strict shareholder value maximization ex post can be efficient ex ante. Such a system would clearly differ from what is advocated by proponents of a "stakeholder approach", as it would limit the rights of the other constituencies to those which would have been agreed upon in a constitutional contract concluded between them and the founder of the firm at the time when long-term contracts are first established.

Download full text files

Export metadata

Additional Services

Share in Twitter Search Google Scholar
Author:Reinhard H. SchmidtGND
Parent Title (English):Universität Frankfurt am Main. Fachbereich Wirtschaftswissenschaften: [Working paper series / Finance and accounting] Working paper series, Finance & Accounting ; No. 3
Series (Serial Number):Working paper series / Johann-Wolfgang-Goethe-Universität Frankfurt am Main, Fachbereich Wirtschaftswissenschaften : Finance & Accounting (3)
Publisher:Univ., Fachbereich Wirtschaftswiss.
Place of publication:Frankfurt am Main
Document Type:Working Paper
Year of Completion:1997
Year of first Publication:1997
Publishing Institution:Universitätsbibliothek Johann Christian Senckenberg
Release Date:2005/09/27
Tag:corporate governance; incomplete contracts; theory of the firm
GND Keyword:Corporate Governance; Unternehmensverfassung; Unternehmenstheorie; Kontrakttheorie
Page Number:19
First Page:80
Last Page:98
Institutes:Wirtschaftswissenschaften / Wirtschaftswissenschaften
Dewey Decimal Classification:3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft
Licence (German):License LogoDeutsches Urheberrecht