The impact of corporate governance on compounding inequality: Maximising shareholder value and inflating executive pay

Clarke, Thomas; Jarvis, Walter; Gholamshahi, Soheyla

doi:10.1016/j.cpa.2018.06.002

Cited by 26 publications

(28 citation statements)

References 30 publications

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“…The governance of organizations (and the lack of ethics) has been at the forefront of public policy and academic debate over the past few decades. 4 Subsequent academic research has sought to understand this phenomenon, with findings pointing to the relative ease at which corporate governance mechanisms can be undermined (Clarke et al 2018;Marnet 2007;Shrives and Brennan 2017). Banerjee (2010) argues that this is because a particular kind of discursive rationality is encouraged that only allows for certain problems to be articulated and particular solutions to be followed, limiting its application in wider contexts (see also Reed 2002).…”

Section: Ethical Governance and Religious Ethicsmentioning

confidence: 99%

Ethical Governance: Insight from the Islamic Perspective and an Empirical Enquiry

Ghafran

Yasmin

2019

J Bus Ethics

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Charity governance is undergoing a crisis of confidence. In this paper, we suggest an alternative approach to how governance could be perceived and conceptualized by considering the ethical notions of governance embedded in religious enquiry, with a specific focus on the Islamic perspective of governance. We firstly develop an ethical framework for charity governance, utilizing insight from the Islamic perspective. Secondly, we undertake an empirical study to assess the experience of governance within Islamic charity organizations. Our theoretical framework provides a comprehensive approach to viewing organizational governance with an emphasis on governance as a mechanism for working towards social justice and the public good. However, our empirical findings reveal an 'ethical gap' between the ideals of the Islamic Ethical Framework and the reality of governance practice within Muslim charity organizations. We consider the implications of these findings and outline avenues for future research.

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Section: Ethical Governance and Religious Ethicsmentioning

confidence: 99%

Ethical Governance: Insight from the Islamic Perspective and an Empirical Enquiry

Ghafran

Yasmin

2019

J Bus Ethics

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“…This article is focused on the efficacy of information disclosure as an instrument of corporate governance. Experience post-Greenbury suggests that disclosing the details of executive remuneration has not achieved the goal of moderating increases in executive pay relative to average earnings (CIPD, 2018;Clarke, Jarvis, & Gholamshahi, 2018). Rather, disclosure, far from shaming those responsible for devising remuneration packages into limiting executive pay, has been implicated in ratcheting up levels of remuneration across the corporate sector.…”

Section: Introductionmentioning

confidence: 99%

Executive remuneration and the limits of disclosure as an instrument of corporate governance

Harvey

Maclean

Price

2020

Critical Perspectives on Accounting

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“…The consequences for the US economy and society of this developing commitment by markets, corporations and executives towards narrow self-interest was increasing unemployment, poverty and inequality that began to disfigure once prosperous industrial communities in the United States, and in other economies where corporations adopted these values (Clarke, Jaris, & Gholamshahi, 2019a;Markoits, 2020). Due to lack of investment structurally large swathes of US manufacturing industry fell into disrepair and decline: "Shareholder primacy thinking is discouraging U.S. corporations from pursuing long-term projects.…”

Section: The Financialisation Of the Us Corporationmentioning

confidence: 99%

“…Holding companies came to control many formerly independent companies (Weinstein, 2012). Lynn Stout discusses these "toxic" consequences of the maximisation of shareholder value alienating employees, customers, suppliers and communities (Clarke et al, 2019;Stout, 2013bStout, , 2016.…”

Section: The Contest On Corporate Purposementioning

confidence: 99%

“…Besides the sharp jolt of Larry Fink's letter to all of them, the CEOs would be aware of a growing public sense of concern, and often anger, at the apparent indifference of big business to the complex social and economic problems insistently impacting upon, and disfiguring, the United States (Clarke et al, 2019). Widespread under-employment, sustained low wages, extensive entrenched poverty, growing inequality, social and community break-down and environmental disaster within the United States, and often even more extreme in the other countries and regions they operated in, was no longer something large US corporations could readily ignore.…”

Section: Us Business Roundtable: the Purpose Of The Corporationmentioning

confidence: 99%

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The Contest on Corporate Purpose: Why Lynn Stout was Right and Milton Friedman was Wrong

Clarke

2020

Accounting, Economics, and Law: A Convivium

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It is now 50 years since Milton Friedman set out his doctrine that “The Social Responsibility of Business Is to Increase Its Profits.” This paper seeks to add fresh and compelling new evidence of why Lynn Stout was correct in her resolute critique of the thesis of shareholder primacy at the heart of the Friedman doctrine, and how this doctrine remains profoundly damaging to the corporations that continue to uphold this belief. It is argued that the Friedman doctrine has had a catastrophic impact upon American business and society beginning with General Motors failure to respond to investor calls for increased concern for safety and pollution at the time of Friedman’s intervention in 1970, stretching all the way to the recent fatal errors of Boeing in placing a higher priority in getting the new Boeing 737 MAX into the market than ensuring the soundness of software controls on the flight deck which led to two horrific plane crashes in 2018 and 2019 with the loss of 346 lives. These tragic errors in corporate judgement are ultimately related to the constricted sense of corporate purpose imposed by Milton Friedman and taken up with enthusiasm by agency theorists focused upon maximising shareholder value. This reckless single-mindedness has privileged the pursuit of the narrowest of financial measures of performance above fundamentals including passenger safety and environmental emissions controls. As a result, innocent lives have been lost, brands have been tarnished, and ultimately the strategic future of significant corporations endangered, and the ecology of the planet imperilled. There is now emerging a new sense of the purpose of the corporation that defines a rationale for corporate social and environmental responsibility in a way similar to Lynn Stout’s more inclusive stakeholder approach. The question remains open whether this will lead to the development of fiduciary duties, governance, strategies, targets, measures, transparency and disclosure that might deliver the sustainable corporation.

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The impact of corporate governance on compounding inequality: Maximising shareholder value and inflating executive pay

Cited by 26 publications

References 30 publications

Ethical Governance: Insight from the Islamic Perspective and an Empirical Enquiry

Ethical Governance: Insight from the Islamic Perspective and an Empirical Enquiry

Executive remuneration and the limits of disclosure as an instrument of corporate governance

The Contest on Corporate Purpose: Why Lynn Stout was Right and Milton Friedman was Wrong

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