Stakeholder Capitalism, Corporate Governance and Firm Value
In countries such as Germany, the legal system is such that firms are necessarily stakeholder oriented. In others like Japan social convention achieves a similar effect. We analyze the advantages and disadvantages of stakeholder-oriented firms that are concerned with employees and suppliers compared to pure shareholder-oriented firms. We show that in a context of imperfect competition stakeholder firms have higher prices and lower output than shareholder-oriented firms. Surprisingly, we also find that firms can be more valuable in a stakeholder society than in a shareholder society. With globalization stakeholder firms and shareholder firms often compete. We identify the circumstances where stakeholder firms are more valuable than shareholder firms, and compare these asymmetric equilibria with symmetric equilibria with stakeholder and shareholder firms. Finally, we show that, in some circumstances, firms may voluntarily choose to be stakeholder-oriented because this increases their value.
|Date of creation:||2009|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.eui.eu/ECO/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Tirole, Jean, 1999.
CEPR Discussion Papers
2086, C.E.P.R. Discussion Papers.
- Fauver, Larry & Fuerst, Michael E., 2006. "Does good corporate governance include employee representation? Evidence from German corporate boards," Journal of Financial Economics, Elsevier, vol. 82(3), pages 673-710, December.
- Rajesh K. Aggarwal & Andrew A. Samwick, 1999.
"Executive Compensation, Strategic Competition, and Relative Performance Evaluation: Theory and Evidence,"
Journal of Finance,
American Finance Association, vol. 54(6), pages 1999-2043, December.
- Rajesh Aggarwal & Andrew A. Samwick, 1996. "Executive Compensation, Strategic Competition, and Relative Performance Evaluation: Theory and Evidence," NBER Working Papers 5648, National Bureau of Economic Research, Inc.
- Marco Pagano & Paolo F. Volpin, 2005.
"The Political Economy of Corporate Governance,"
American Economic Review,
American Economic Association, vol. 95(4), pages 1005-1030, September.
- Marco Pagano & Paolo Volpin, 1999. "The Political Economy of Corporate Governance," CSEF Working Papers 29, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy, revised 01 Jul 2005.
- Pagano, Marco & Volpin, Paolo, 2001. "The Political Economy of Corporate Governance," CEPR Discussion Papers 2682, C.E.P.R. Discussion Papers.
- Kenneth Scott, 1998. "The Role Of Corporate Governance In South Korean Economic Reform," Journal of Applied Corporate Finance, Morgan Stanley, vol. 10(4), pages 8-15.
- Andrei Shleifer & Robert W. Vishny, 1996.
"A Survey of Corporate Governance,"
NBER Working Papers
5554, National Bureau of Economic Research, Inc.
- Andrei Shleifer & Robert W. Vishny, 1995. "A Survey of Corporate Governance," Harvard Institute of Economic Research Working Papers 1741, Harvard - Institute of Economic Research.
- Kenichi Ueda & Stijn Claessens, 2008. "Banks and Labor As Stakeholders; Impacton Economic Performance," IMF Working Papers 08/229, International Monetary Fund.
- Becht, Marco & Bolton, Patrick & Roell, Ailsa, 2003.
"Corporate governance and control,"
Handbook of the Economics of Finance,
in: G.M. Constantinides & M. Harris & R. M. Stulz (ed.), Handbook of the Economics of Finance, edition 1, volume 1, chapter 1, pages 1-109
- Marco Becht & Patrick Bolton & Ailsa Roell, 2003. "Corporate governance and control," ULB Institutional Repository 2013/13330, ULB -- Universite Libre de Bruxelles.
- Patrick Bolton & Marco Becht & Alisa Röell, 2002. "Corporate Governance and Control," NBER Working Papers 9371, National Bureau of Economic Research, Inc.
- Dasgupta, Sudipto & Titman, Sheridan, 1998.
"Pricing Strategy and Financial Policy,"
Review of Financial Studies,
Society for Financial Studies, vol. 11(4), pages 705-37.
- Chaim Fershtman & Kenneth L Judd, 1984.
"Equilibrium Incentives in Oligopoly,"
642, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Mitchel Y. Abolafia (ed.), 2005. "Markets," Books, Edward Elgar, number 2788, March.
- Denis, Diane K. & McConnell, John J., 2003. "International Corporate Governance," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 38(01), pages 1-36, March.
- Martijn Cremers & Vinay Nair & Urs Peyer, 2007. "Takeover Defenses and Competition," Yale School of Management Working Papers amz2491, Yale School of Management, revised 18 Sep 2007.
- Dixit, Avinash K, 1986. "Comparative Statics for Oligopoly," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 27(1), pages 107-22, February.
- Blinder Alan S., 1993. "A Simple Note on the Japanese Firm," Journal of the Japanese and International Economies, Elsevier, vol. 7(3), pages 238-255, September.
- Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
- Masahiko Aoki, 2013.
"Toward an Economic Model of the Japanese Firm,"
in: Comparative Institutional Analysis, chapter 18, pages 315-341
- Dore, Ronald, 2000. "Stock Market Capitalism: Welfare Capitalism: Japan and Germany versus the Anglo-Saxons," OUP Catalogue, Oxford University Press, number 9780199240616, March.
When requesting a correction, please mention this item's handle: RePEc:eui:euiwps:eco2009/10. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Rhoda Lane)
If references are entirely missing, you can add them using this form.