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Shareholder Primacy and Deontology
Author(s) -
Kriegstein Hasko
Publication year - 2015
Publication title -
business and society review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.524
H-Index - 21
eISSN - 1467-8594
pISSN - 0045-3609
DOI - 10.1111/basr.12063
Subject(s) - argument (complex analysis) , shareholder , law and economics , deontological ethics , shareholder primacy , vulnerability (computing) , position (finance) , business , economics , sociology , law , political science , corporate governance , finance , biochemistry , chemistry , computer security , computer science
This article argues that shareholder primacy cannot be defended on the grounds that there is something special about the position of shareholders that grounds a right to preferential treatment on part of management. The notions of property and contract, traditionally thought to ground such a right, are now widely recognized as incapable of playing that role. This leaves shareholder theorists with two options. They can either abandon the project of arguing for their view on broadly deontological grounds and try to advance consequentialist arguments instead or they can search for other morally relevant properties that could ground shareholder rights. The most sustained argument in the latter vein is M arcoux's attempt to show that the vulnerability of shareholders mandates that managers are their fiduciaries. I show that this argument leads to the unacceptable conclusion that it would be unethical for corporations to make incomplete contracts with nonshareholding stakeholders.