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Behavioral Economics, Federalism and the Triumph of Stakeholder Theory

In: Corporate Social Responsibility and Corporate Governance

Author

Listed:
  • Allen Kaufman
  • Ernie Englander

Abstract

As in the Cold War’s conclusion, when the Berlin Wall fell, stakeholder theory’s victory over financial agency theory occurred with a tumultuous event — the 2001 stock market crash. Financial agency theorists were left to concede that financial markets were less than perfect (Jensen, Murphy and Ruck, 2004; Jensen, 2002). Even Michael Jensen, agency theory’s most prominent apostle, proclaimed himself an ‘enlightened’ stakeholder advocate. This qualification permitted Jensen to distinguish himself from those managerial theorists who had for two decades resisted agency theory’s advance. Yet, his distance seems rather odd, given the recent widespread acceptance of behavioral economics and law. For, when these are incorporated into stakeholder theory, the contentious descriptive disagreements find a satisfactory resolution, leaving discord on that enduring ethical issue - a fair surplus divide.

Suggested Citation

  • Allen Kaufman & Ernie Englander, 2011. "Behavioral Economics, Federalism and the Triumph of Stakeholder Theory," International Economic Association Series, in: Lorenzo Sacconi & Margaret Blair & R. Edward Freeman & Alessandro Vercelli (ed.), Corporate Social Responsibility and Corporate Governance, chapter 4, pages 73-98, Palgrave Macmillan.
    • Handle: RePEc:pal:intecp:978-0-230-30211-2_4
    DOI: 10.1057/9780230302112_4
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    Citations

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    Cited by:

    1. Franck Brulhart & Sandrine Gherra & Bertrand V. Quelin, 2019. "Do Stakeholder Orientation and Environmental Proactivity Impact Firm Profitability?," Journal of Business Ethics, Springer, vol. 158(1), pages 25-46, August.
    2. Mercedes Rodríguez-Fernández & Eva M. Sánchez-Teba & Alberto A. López-Toro & Susana Borrego-Domínguez, 2019. "Influence of ESGC Indicators on Financial Performance of Listed Travel and Leisure Companies," Sustainability, MDPI, vol. 11(19), pages 1-20, October.
    3. Feng, Yumei & Pan, Yuying & Ho, Kung-Cheng & Liu, Guanchun, 2023. "Corporate governance of weak stakeholders: Minority investors and investment efficiency," Emerging Markets Review, Elsevier, vol. 56(C).
    4. Alberto A. López-Toro & Eva María Sánchez-Teba & María Dolores Benítez-Márquez & Mercedes Rodríguez-Fernández, 2021. "Influence of ESGC Indicators on Financial Performance of Listed Pharmaceutical Companies," IJERPH, MDPI, vol. 18(9), pages 1-16, April.
    5. Carminati, Lara, 2020. "Behavioural Economics and Human Decision Making: Instances from the Health Care System," Health Policy, Elsevier, vol. 124(6), pages 659-664.
    6. Elena Merino & Montserrat Manzaneque & Yolanda Ramírez, 2019. "Value-added distribution to stakeholder of Spanish listed companies: a corporate governance perspective," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 23(3), pages 577-604, September.
    7. Rania B'eji & Ouidad Yousfi & Abdelwahed Omri, 2021. "Corporate Social Responsibility and Corporate Governance: A cognitive approach," Papers 2102.09218, arXiv.org.
    8. Rania Béji & Ouidad Yousfi & Abdelwahed Omri, 2020. "Corporate Social Responsibility and Corporate Governance: A cognitive approach," Post-Print hal-03144756, HAL.
    9. Hafiz Muhammad Awais & Danish Ahmed Siddiqui, 2020. "Boards' Gender Diversity and Firms' Financial and Ethical Performance in Pakistan: A Comparative Analysis," Business and Economic Research, Macrothink Institute, vol. 10(3), pages 255-280, September.
    10. Mollie Painter & Mar Pérezts & Ghislain Deslandes, 2021. "Understanding the human in stakeholder theory : a phenomenological approach to affect-based learning," Post-Print hal-03188192, HAL.

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