Shareholder Value and the Stakeholder Debate in the UK

Abstract

Shareholder value is assumed to be the ruling idea in Anglo-American corporate governance. This paper first reviews the historical origins of the idea of shareholder value in the UK and the particular theoretical assumptions about the company which underpin it. It assesses the reasons why it was subjected to so little subsequent political challenge, and contrasts this with US experience. This historical and theoretical context is then used to explore the current debate on stakeholding in the UK, whether the UK system of corporate governance needs reform, and if so in which direction. Four main positions on stakeholding are identified ± property rights, enlightened managerialism, active shareholders, and corporate pluralism. The paper concludes with an assessment of the political and legal pressures for reform of the UK model of corporate governance and the prospects for any significant change.

A Cross-country Study of the Effects of Institutional Ownership on Credit Ratings

“…This reveals that institutional ownership had a mostly positive effect on credit rating among Anglo American companies. Gamble and Kelly (2001) support this finding. Using the agency theory, this finding was also supported (Ashbaugh-Skaife et al, 2006).…”

“…The Anglo-American model holds that the director of organisations has a fiduciary duty to its shareholders to maximise return on their shareholder value. According to Gamble and Kelly (2001), the shareholders are the ones that are thought to have the right to the greatest returns because they are the ones that take the greatest risks. These shareholders are seen as the ones that are the major owners of the organisations (Gamble and Kelly, 2001).…”

“…According to Gamble and Kelly (2001), the shareholders are the ones that are thought to have the right to the greatest returns because they are the ones that take the greatest risks. These shareholders are seen as the ones that are the major owners of the organisations (Gamble and Kelly, 2001). It is this reasoning that sees the Anglo-American model as showing a positive relationship between institutional owners and credit ratings.…”

“…The major shareholders are to be seen as the privileged group in a company, because they are the ones that take the greatest risks, and so must be seen as the major owners of the companies (Gamble & Kelly, 2001). The Continental European or stakeholding corporate governance model has several unique characteristics.…”

Corporate social reporting and stakeholder accountability: The missing link

“…Other groups after all, particularly employees, make firm specific investments and incur risks in the way in which shareholders do. To deny them representation in the governance of the company therefore appears somewhat difficult to justify on moral grounds (see, for example, Gamble and Kelly, 2001).…”