Peter Crow
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ECMLG'13: Don't forget the stakeholders' interests

16/11/2013

2 Comments

 
Marina Lovrincevic (University of Split, Croatia) presented a very interesting paper on the relationship between supervisory board efficiency and stakeholder orientation. In so doing, Lovrincevic exposed a chasm between the Euro-centric view of the sustainable purpose of the company (based on stakeholder theory) and the Anglo-American view (agency theory). 

Lovrincevic's analysis, of empirical data from a sample of Croatian non-financial listed companies, asserted that supervisory boards are helpful to protecting the interests of the wider set of stakeholders. An interesting debate ensued, essentially comparing and contrasting the Friedman view (value maximisation for the shareholder) and the stakeholder view (value distribution). The audience seemed to agree that the paper provided an interesting platform for future research, particularly research to explore whether a modified view of stakeholder theory might provide a more complete basis for effective governance.
2 Comments
Sarah Wilson link
15/11/2013 16:44:44

Isn't it time we stopped talking about the UK as an adjunct of the US. It's not Anglo-American, it's just American. The UK's company law embraced the stakeholder concept many years ago and the gulf betwen the US and UK is now so great the only thing we have in common is the use of the English language.

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Peter Crow link
15/11/2013 18:38:35

Thank you for taking the time to share your comment Sarah.

I understood that the UK legislation requires boards to act in the best interests of the company, exactly as is the case in Australian and New Zealand legislation, whereas US boards are charged to act in the best interests of the shareholder. Notwithstanding the recipient of the best interests, the basis is value creation for the "owner". In contrast, the supervisory board of the two-tier governance structures (as exists in Germany and other jurisdictions) are designed to consider and accommodate the wider set of views and wishes of various stakeholder groups.

I would appreciate you sharing your understanding of the UK legislation, to help me understand how and where the UK legislation incorporates the stakeholder view that you mention.

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Peter Crow PhD CMInstD

Company director | Board advisor
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