The Corporate Objective
Show Less

The Corporate Objective

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.
Buy Book in Print
Show Summary Details
You do not have access to this content

Chapter 6: Investors

Andrew Keay


1. INTRODUCTION It is well-recognised that a company cannot be successful without the involvement in, and contribution by, various stakeholders,1 known in this work as investors,2 in company life.3 EMS certainly acknowledges that entity wealth maximisation is something that can only be achieved with a contribution from an array of investors, but, as was said in Chapter 4, the company is not a sum of all the interests of the investors. It could only be so if one were to allocate the investors a fixed priority in relation to one another4 and that cannot be done, for it is not possible to affix any specific proportion of the result of the company’s trading to any particular investor’s contribution.5 Management must remember that a large portion of its role is to coordinate the resources that are invested in their company by investors in order to produce goods or services and ultimately to make a profit. It is contended that ordinary decency requires companies to be obliged not to permit investors to harbour unreasonable expectations from their dealing with the company.6 But OECD, Annotations of the Principles of Corporate Governance (Clause IV), 2004. Accessible at (last visited, 1 February 2010). 2 Douglas Baird and Todd Henderson in ‘Other People’s Money’ (2008) 60 Stanford Law Review 1309 at 1311 acknowledge the groups discussed in this Chapter as ‘investors.’ To do otherwise is, according to these commentators, misleading. 3 This is acknowledged by General Motors. See (last visited, 15 February 2009). 4...

You are not authenticated to view the full text of this chapter or article.

Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.

Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.

Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.

Further information

or login to access all content.