2010
DOI: 10.1111/j.1755-053x.2010.01100.x
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The Relation between Stakeholder Management, Firm Value, and CEO Compensation: A Test of Enlightened Value Maximization

Abstract: "Whether firms pursue shareholder value maximization or the maximization of stakeholder welfare is a controversial issue whose outcomes seem irreconcilable. We propose that firms are likely to compensate their executives for pursuing the firm's goal be it shareholder value maximization or the maximization of stakeholder welfare. In this paper, we examine the correlation between firm value, stakeholder management, and compensation. We find that stakeholder management is positively related to firm value. However… Show more

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Cited by 81 publications
(71 citation statements)
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References 108 publications
(170 reference statements)
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“…Studies such as McGuire et al (2003) find no significant relationship between incentives and firm social performance, and Benson and Davidson (2010) find that improved stakeholder management does not result in additional CEO compensation. Cordeiro and Sarkis (2008) test whether there is an explicit linkage between executive compensation and environmental performance and find partial evidence of a linkage and suggest that it is likely that US companies utilise the linkage between top executive compensation and environmental performance as a management communication strategy to maintain their standing with stakeholders.…”
Section: Executive Compensation and Social Performancementioning
confidence: 99%
“…Studies such as McGuire et al (2003) find no significant relationship between incentives and firm social performance, and Benson and Davidson (2010) find that improved stakeholder management does not result in additional CEO compensation. Cordeiro and Sarkis (2008) test whether there is an explicit linkage between executive compensation and environmental performance and find partial evidence of a linkage and suggest that it is likely that US companies utilise the linkage between top executive compensation and environmental performance as a management communication strategy to maintain their standing with stakeholders.…”
Section: Executive Compensation and Social Performancementioning
confidence: 99%
“…We propose that there is no direct answer to the controversial question of whether (potential) investors punish or reward companies for deciding in favor of nonshareholding stakeholders (Benson and Davidson 2010;Coombs and Gilley 2005). From a wealth maximization perspective (Friedman 1970;Rivoli 1995), (potential) investors may reduce their investments in response to management's prioritization of non-shareholding stakeholders due to the costs associated with it (Ogden and Watson 1999).…”
Section: (Potential) Investors' Reactions To the Management Of Nonshamentioning
confidence: 99%
“…This confirms that if companies want to succeed in improving their reputation, they need to activate an effective management of stakeholder relationship. If managing relations with stakeholders is necessary for enhancing reputation and value maximization, then it is reasonable to expect the development of stakeholder orientation to be positively related to firm reputation (Benson, Davidson 2010).…”
Section: Global Markets Corporate Reputation and Stakeholder Managementmentioning
confidence: 99%