Is Stakeholder Value a Barrier for Shareholder Value?

Abstract

Shareholder primacy is the foundational principle of one company generating the biggest interest for shareholders. As the separation of ownership and control, the protection of shareholders has been placed under spotlight and attracted more attention. Honestly, it is quite rational for companies to consider the interest of shareholders as priority, after all, shareholders as investors must undertake the risks of business. Yet, with companies are evolving into large-scale and complex entities, they need to balance multiple constituents of value such as employees benefits, social obligation, and consumers. Where the shareholder value may generate some conflicts with stakeholder value inevitably, leaving the managers one knotty issue. However, potential conflicts stem from wrong strategies rather than intrinsic features to a large degree. This article will dialectically treat different value orientations in terms of theoretical structure and legislations to prove that proper distribution ratio of interest is the solution.