Stakeholder Governance, Competition and Firm Value

Article, Research, Preprint English OPEN
Allen, F ; Carletti, E ; Marquez, R (2014)
  • Publisher: eScholarship, University of California
  • Journal: volume 19, issue 3, pages 1,315-1,346
  • Related identifiers: doi: 10.1093/rof/rfu011
  • Subject: G32 | L21 | L22
    • jel: jel:G32 | jel:L22 | jel:L21
      ddc: ddc:330

In many countries, the legal system or social norms ensure that firms are stakeholder oriented. We analyze the advantages and disadvantages of stakeholder-oriented firms that are concerned with employees and suppliers compared to shareholder-oriented firms in a model of imperfect competition. Stakeholder firms are more (less) valuable than shareholder firms when marginal cost uncertainty is greater (less) than demand uncertainty. With globalization shareholder firms and stakeholder firms often compete. We identify the circumstances where stakeholder firms are more valuable than shareholder firms and compare these mixed equilibria with the pure equilibria with stakeholder and shareholder firms only. Finally, we analyze firm financial constraints and derive implications for the capital structure of stakeholder firms.
  • References (11)
    11 references, page 1 of 2

    Acharya, V., S. Myers, and R. Rajan, 2011, “The Internal Governance of Firms,” Journal of Finance, 66, 689-720.

    Allen, F., 2000, “Capital Structure and Imperfect Competition in Product Markets,” in P. Hammond and G. Myles (eds.), Incentives, Organization, and Public Economics: Papers in Honour of Sir James Mirrlees, Oxford: Oxford University Press, 281-301.

    Allen, F., 2005, “Corporate Governance in Emerging Markets,” Oxford Review of Economic Policy 21, 164-177.

    Allen, F., E. Carletti, and R. Marquez (2008). “Stakeholder Capitalism, Corporate Governance and Firm Value,” Working Paper 07-39, Wharton Financial Institutions Center, University of Pennsylvania.

    Allen, F., and D. Gale, 2000, Comparing Financial Systems, Cambridge, MA: MIT Press.

    Aggarwal, R. and A. Samwick, 1999, “Executive Compensation, Strategic Competition and Relative Performance Evaluation; Theory and Evidence,” Journal of Finance 54, 1999- 2043.

    Bae, K.-H., J.-K. Kang and J. Wang, 2011, “Employee Treatment and Firm Leverage: A Test of the Stakeholder Theory of Capital Structure,” Journal of Financial Economics, 100, 130-155.

    Beatty, C.A., 1995, “The Cash Flow and Informational Effects of Employee Stock Ownership Plans,” Journal of Financial Economics, 38, 211-240.

    Becht, M., P. Bolton, and A. Röell, 2003, “Corporate Governance and Control,” Chapter 1 in G. Constantinides, M. Harris, and R. Stulz, (eds.) the Handbook of the Economics of Finance, Amsterdam: Elsevier-North-Holland, 1-109.

    Berk, J.B., R. Stanton and J. Zechner, 2010, “Human Capital, Bankruptcy, and Capital Structure,” Journal of Finance, 65(3), 891-926.

  • Similar Research Results (4)
  • Metrics
    No metrics available
Share - Bookmark