Abstract
The neoclassical paradigm assumes that shareholders' utility is solely a function of their wealth, and prescribes that management should act in a manner consistent with share price maximization. The stakeholder view also assumes that shareholders' utility derives from wealth, but prescribes that managers must balance the shareholder wealth maximization objective against the rights of other constituencies. Thus, while neoclassicists and stakeholder theorists have different prescriptives for management behavior, their definitions of the shareholders' interest are consistent — shareholders are self-interested economic agents whose utility is best served by share price maximization. However, if shareholders are “other-interested,” and attack importance to ethical and moral values, then both the neoclassical and stakeholder view derive from invalid assumptions. In this paper, I present evidence that much shareholder behavior is ethically motivated. As a result, the basis for both the neoclassical and the stakeholder view are weakened.
Keywords
Economic Growth Stakeholder Theorist Management Behavior Economic Agent Share Price
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.
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© Kluwer Academic Publishers 1995