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Beyond Agency Theory, a Post-crisis View of Corporate Law

Author

Listed:
  • Blanche Segrestin

    (CGS i3 - Centre de Gestion Scientifique i3 - Mines Paris - PSL (École nationale supérieure des mines de Paris) - PSL - Université Paris Sciences et Lettres - I3 - Institut interdisciplinaire de l’innovation - CNRS - Centre National de la Recherche Scientifique)

  • Armand Hatchuel

    (CGS i3 - Centre de Gestion Scientifique i3 - Mines Paris - PSL (École nationale supérieure des mines de Paris) - PSL - Université Paris Sciences et Lettres - I3 - Institut interdisciplinaire de l’innovation - CNRS - Centre National de la Recherche Scientifique)

Abstract

For decades, managers' powers and their freedom to make strategic decisions were taken for granted in the field of corporate governance. The present crisis has revealed that their managerial latitude is in reality much weaker than thought. The growing influence of shareholders has undermined the historical and professional legitimacy of managers, who are now viewed as 'agents' controlled by 'principals'. This paper makes two contributions. First, we hold that the crisis is not a purely economic or financial crisis but a fundamental crisis of management, with its function of regulating the relationship between the firm and society. Second, we show that this crisis is rooted in law, since corporate law does not actually protect the autonomy of management. Until now, management theory has underestimated the role of law in the evolutions of corporate governance; we argue that management research needs to open its boundaries and specifically to re-examine corporate law. We suggest new governance rules to ensure managers have the latitude to organize collective creation processes in a way that is both efficient and legitimate. And we discuss some avenues for reflecting on a postcrisis business law.

Suggested Citation

  • Blanche Segrestin & Armand Hatchuel, 2011. "Beyond Agency Theory, a Post-crisis View of Corporate Law," Post-Print hal-00637286, HAL.
  • Handle: RePEc:hal:journl:hal-00637286
    DOI: 10.1111/j.1467-8551.2011.00763.x
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    Citations

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    Cited by:

    1. Domenico Rocco Cambrea & Andrea Calabrò & Maurizio La Rocca & Francesco Paolone, 2022. "The impact of boards of directors’ characteristics on cash holdings in uncertain times," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 26(1), pages 189-221, March.
    2. Blanche Segrestin & Franck Aggeri & Albert David & Pascal Le Masson, 2017. "Armand Hatchuel and the Refoundation of Management Research: Design Theory and the Epistemology of Collective Action," Post-Print hal-01516296, HAL.
    3. Blanche Segrestin & Andrew Johnston & Armand Hatchuel, 2019. "The Separation Of Directors And Managers: A Historical Examination Of The Status Of Managers," Post-Print hal-01957329, HAL.
    4. Veldman, Jeroen, 2019. "Inequality, Inc," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 63(C).
    5. Blanche Segrestin & Kevin Levillain & Armand Hatchuel, 2022. "Management & Law: The Forgotten Contribution of P. Selznick," Post-Print hal-03609700, HAL.
    6. Blanche Segrestin & Armand Hatchuel & Kevin Levillain, 2021. "When the Law Distinguishes Between the Enterprise and the Corporation: The Case of the New French Law on Corporate Purpose," Journal of Business Ethics, Springer, vol. 171(1), pages 1-13, June.
    7. Blanche Segrestin & Franck Aggeri & Pascal Le Masson & Albert David, 2017. "Armand Hatchuel and the Refoundation of Management Research," Post-Print hal-01534794, HAL.
    8. Jose-Luis Retolaza & Leire San-Jose & Maite Ruiz-Roqueñi, 2014. "Ontological Stakeholder View: An Innovative Proposition," Global Business Review, International Management Institute, vol. 15(1), pages 25-36, March.
    9. Jan Kultys, 2016. "Controversies About Agency Theory As Theoretical Basis For Corporate Governance," Oeconomia Copernicana, Institute of Economic Research, vol. 7(4), pages 613-634, December.
    10. Kevin Levillain & Blanche Segrestin, 2018. "From Primacy to Commitment: Revising corporate governance theories to account for recent legal innovations in the US," Post-Print hal-01777788, HAL.
    11. Rachelle Belinga & Blanche Segrestin, 2018. "Principals and stewards? An exploration of the role of institutional investors in corporate governance," Post-Print hal-01791931, HAL.
    12. Clarke, Thomas & Jarvis, Walter & Gholamshahi, Soheyla, 2019. "The impact of corporate governance on compounding inequality: Maximising shareholder value and inflating executive pay," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 63(C).
    13. Rachelle Belinga & Blanche Segrestin, 2019. "A conceptual mapping of the logics of institutional investors' corporate governance responsibilities: The case for "custodian" investor stewardship," Post-Print hal-02167819, HAL.
    14. Clarke Thomas, 2013. "Deconstructing the Mythology of Shareholder Value: A Comment on Lynn Stout’s “The Shareholder Value Myth”," Accounting, Economics, and Law: A Convivium, De Gruyter, vol. 3(1), pages 15-42, January.
    15. Blanche Segrestin & Armand Hatchuel & Kevin Levillain, 2021. "When the Law Distinguishes Between the Enterprise and the Corporation: The Case of the New French Law on Corporate Purpose," Post-Print hal-02465609, HAL.
    16. Veldman, Jeroen, 2018. "Inequality, Inc," MPRA Paper 86644, University Library of Munich, Germany.
    17. Kevin Levillain & Blanche Segrestin, 2019. "Commitment in the unknown: An innovative use of the Profit-with-Purpose corporate framework to ensure responsible innovation," Post-Print hal-02171252, HAL.
    18. Kevin Levillain & Blanche Segrestin, 2012. "A mission-centric view of the firm: Lessons from Social Entrepreneurship," Post-Print hal-00733413, HAL.
    19. Chandra, Situmeang & Erlina, Erlina & Maksum, Azhar & Supriana, Tavi, 2018. "Effect of corporate governance on cost of equity before and after international financial reporting standard implementation," MPRA Paper 87759, University Library of Munich, Germany, revised Mar 2018.
    20. Åberg, Carl & Bankewitz, Max & Knockaert, Mirjam, 2019. "Service tasks of board of directors: A literature review and research agenda in an era of new governance practices," European Management Journal, Elsevier, vol. 37(5), pages 648-663.
    21. Rachelle Belinga & Blanche Segrestin, 2019. "A conceptual mapping of the logics of institutional investors' corporate governance responsibilities: The case for "custodian" investor stewardship," Post-Print hal-02444756, HAL.
    22. Chandra Situmeang & Erlina & Azhar Maksum & Tavi Supriana, 2018. "Effect Of Corporate Governance On Cost Of Equity Before And After International Financial Reporting Standard Implementation," Junior Scientific Researcher, SC Research Publishing SRL, vol. 4(1), pages 1-13, May.
    23. Levillain, Kevin & Segrestin, Blanche, 2019. "From primacy to purpose commitment: How emerging profit-with-purpose corporations open new corporate governance avenues," European Management Journal, Elsevier, vol. 37(5), pages 637-647.
    24. Kevin Levillain & Blanche Segrestin, 2018. "From Primacy to Commitment: Revising corporate governance theories to account for recent legal innovations in the US," Working Papers hal-01777788, HAL.
    25. Kevin Levillain & Blanche Segrestin, 2019. "From primacy to purpose commitment: How emerging profit-with-purpose corporations open new corporate governance avenues," Post-Print hal-02290622, HAL.

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