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Stockholders and Stakeholders: A New Perspective on Corporate Governance

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Abstract

The purpose of this article is to show how the concept of stakeholders in an organization can be used to understand the tasks of the board of directors. The authors argue that a volunteeristic approach to questions of corporate governance which focuses on effective director behavior is preferable to structural change via legislation.
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Stockholders and Stakeholders: A New Perspective on Corporate Governance
Freeman, R. Edward
California Management Review (pre-1986); Spring 1983; 25, 000003; ABI/INFORM Global
pg. 88
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Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
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Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
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... Studies have shown that purpose-led organizations can achieve higher levels of employee engagement, brand loyalty, and financial performance (Edmans, 2023;George et al., 2023;Lee & Raschke, 2020;von Ahsen & Gauch, 2022). Additionally, research suggests that these organizations have the potential for long-term financial outperformance (Lee & Raschke, 2020), aligning with the economic aspect of the TBL, by building stronger relationships with stakeholders (Freeman & Reed, 1983). ...
... While valuable, this emphasis needs to be balanced by considering the broader impacts on external stakeholders. Stakeholder theory bridges this gap by considering the needs and interests of diverse groups such as employees, communities, investors, and environmental groups (Freeman & Liedtka, 1997;Freeman & Reed, 1983;Freeman et al., 2020;Schaltegger et al., 2019). Integrating this theory strengthens our framework's reach and relevance, ensuring it remains responsive to a multifaceted sustainability landscape. ...
... Stakeholder engagement: The ongoing process of identifying, communicating with, and collaborating with various groups impacted by the organization's activities, including customers, employees, communities, investors, and regulators (Flyverbom et al., 2019;Freeman & Liedtka, 1997;Freeman & Reed, 1983;Freeman et al., 2020;Schaltegger et al., 2019). ...
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... The impact of such investment acBviBes on corporate performance can be significant, leading to changes in systemaBc risk, investor senBment, asset prices and sustainability. Scholars have invesBgated the performance of ESG acBviBes under various theories, such as the agency theory of Jensen and Meckling (1976), the stakeholder theory of Freeman and Reed (1983), the jusBce and beneficence theories of Brown and Forster (2013), the corporate culture theory of Fleischer (2006) and risk management theory of (Godfrey, 2005). In line with prior studies, this study adopts the signalling, legiBmacy and risk management theories to understand the consequences of ESG acBviBes. ...
... The impact of such investment acBviBes on corporate performance can be significant, leading to changes in systemaBc risk, investor senBment, asset prices and sustainability. Scholars have invesBgated the performance of ESG acBviBes under various theories, such as the agency theory of Jensen and Meckling (1976), the stakeholder theory of Freeman and Reed (1983), the jusBce and beneficence theories of Brown and Forster (2013), the corporate culture theory of Fleischer (2006) and risk management theory of (Godfrey, 2005). In line with prior studies, this study adopts the signalling, legiBmacy and risk management theories to understand the consequences of ESG acBviBes. ...
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... According to Freeman and Reed (1983), the stakeholders' theory offers prosperous insights into the elements that inspire managerial behavior in relation to the social and environmental disclosure practices of companies as the activity of the companies affect the a number of stakeholders of the firm vis a vis environmental impacts and cost disclosures of the firm. Previous social and environmental accounting research like Fokeye, Odianonsen and Aanu (2015); Ebiringa (2013) which utilized these theories indicate that companies respond to the expectations of stakeholders groups particularly and generally to these of the broader community in which they operate, through the provision of social and environmental information inside the annual reports. ...
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For a discussion of the implications for corporate governance see Evan W., Organization Theory
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governs the investment of these funds. See H. R. 14138, 95th Cong. 2d Sess. for a public employee version of ERISA. See also Hutchinson, Cole, “Legal Standards Governing Investment of Pension Assets for Political Goals