Shareholder primacy or stakeholder governance?

Dirk Schoenmaker and Willem Schramade

No 19600, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Externalities happen largely in the private sector and cannot be fully separated from production decisions. Decision-making in companies thus co-determines the degree of sustainability of an economy. Advances in impact valuation allow us to express the stakeholder interests in finance and valuation terms. We can thus compare investment decisions and payout decisions for three types of models: the shareholder value model, the shareholder welfare model, and the stakeholder model. Our results show that stakeholder-driven companies are better able to pursue a sustainable economy. Corporate governance should be adjusted accordingly.

JEL-codes: G32 G34 G35 H23 (search for similar items in EconPapers)
Date: 2024-10
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