Scepticism and Stakeholders
How far do accounting/auditing practices really ensure accountability?
Note calls for shareholders to have
- more information
- scope to intervene in running organisations.
Punter capitalists
Argument: shareholders should maximise their own economic
selfinterest and not become involved in governance.
If unhappy with a firm's managers, walk away. Falls
in share prices will pressure incumbent managers.
'Betting-slip mentality'.
Shareholder activism
Calls for more involvement and strengthening of the
shareholder role. 1993, directors at Kodak, IBM and
Westinghouse were ousted by shareholder pressure.
Shareholder activism has arisen
- where managers were distinctly unaccountable
- a weakening belief in efficient market theory
- where major shareholders held big chunks of underperforming,
mismanaged businesses (cannot sell except
at a loss).
Big stakeholder intervention comes from
- growth of institutional investor stakeholders: pension funds and ethical trusts.
MORE THAN
- small shareholders, employee representatives
- other intervention comes from self-appointed community/environmental activists
OHP 12 on Ethics and Corporate Governance
This resource was written by Chris Jarvis for the BOLA project.