Stakeholder Theory in Corporate Law: Has It Got What It Takes?

By: Andrew Keay


There has been much debate for many years regarding what should be the objective of the large public corporation. This issue is important for a number of reasons, not least of which is that the theory nominated will underpin corporate governance and dictate, to a large extent, the kind of corporate governance system that will exist. As far as the corporation’s objective is concerned, two theories have been dominant: the shareholder primacy theory and the stakeholder theory. The former is operative in what I will call “Anglo-American jurisdic- tions,” namely jurisdictions that model their law and practice on one or both of the United States or the United Kingdom. Jurisdictions falling within this category also include Canada, Australia, and New Zealand. The stakeholder theory operates in many continental European and East Asian countries. Prime examples are Germany and Japan.


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