The Corporate Objective
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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.
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Chapter 7: Managerial Discretion and Accountability

Andrew Keay


INTRODUCTION In the articulation of EMS in Chapter 4 it was made clear that the managers and directors have the responsibility of fulfilling the objective of the company, and in Chapter 5 there was an examination of the position that should exist if managers or the board as a whole failed to do so; the latter Chapter focused on how investors could enforce EMS against the directors. It would not be a complete study of EMS if we did not consider the position of the managers, for they clearly play an important role in the life of the company under EMS. There is much that can be said about managers. This Chapter necessarily has to be limited and it merely purports to provide a basic consideration of managers and their role as it is relevant to EMS. The management of a business by the managers is generally totally in their discretion provided that they do not steal or commit outright fraud.1 In making decisions and devising strategy the managers are exercising power and authority.2 Typically, today, the company’s articles of association or by-laws will vest the board of directors with general management powers.3 In some jurisdictions, such as the UK, where directors have been given wide-ranging powers, then they alone can exercise them, and the only thing that the members can do is to pass a special resolution to amend M. Gelter, ‘The Dark Side of Shareholder Influence: Managerial Autonomy and Stakeholder Orientation in Comparative Corporate Governance’ (2009) 50 Harvard...

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