The Corporate Objective

The Corporate Objective

Corporations, Globalisation and the Law series

Andrew Keay

The Corporate Objective addresses a question that has been subject to much debate: what should be the objective of public corporations? It examines the two dominant theories that address this issue, the shareholder primacy and stakeholder theories, and finds that both have serious shortcomings.

Chapter 9: Epilogue

Andrew Keay

Subjects: law - academic, company and insolvency law, corporate law and governance


It is not intended to compose a long conclusion, but after a journey through many concepts, theories and ideas a few words are appropriate and necessary. There have been years of debate concerning the objective of the public company and still we have no resolution. The law offers ambiguities.1 Argument over the years has revolved around two dominant positions, the shareholder primacy approach and the stakeholder approach. Commentators have tended to be polarised, robustly holding to one of the two extremes, shareholder primacy or stakeholder. There has been little inclination, relatively speaking, to look at other approaches or even to be more bold and devise new approaches. Some have sought to modify aspects of the two dominant theories. After providing a long, but important, opening Chapter that sought to set the scene for the ensuing discussion and to raise many of the issues broached later in the book, Chapters 2 and 3 sought to examine the shareholder primacy theory and the stakeholder theory respectively, and to do so in some depth. The conclusion from the two Chapters was that they both had significant shortcomings. In Chapter 4 a new model was proposed, the entity maximisation and sustainability model (EMS), which differed in important ways from the two aforementioned theories. As well as providing some justification for the model, the Chapter introduced the model and set out in general terms how it would work. The book then sought to explain EMS and some of the practical issues that are raised in...

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