Stakeholders In Corporate Governance Theory

Research field in theory of the firm has developed into two main branchesgradually since 1960s:shareholder primacy theory vs.stakeholder theory.Theformer deems that shareholders hold the firm, the later insists that thestakeholders are the real owner of the firm. The scholars holding differentopinions debated impetuously in 1980s because the two theories had differentimplications in corporate governance.The stakeholder theory has deeper academic background.It grew up with thedevelopment of contract theory and property rights theory after 1960s.On theother hand,in 1970s enterprises all over the world encountered lots of realproblems such as business ethics,corporate socialresponsibilities,enterprise environmental management and so on. All theproblems required the firm pay more attention on its stakeholders' interests.The normative analysis approach is used to clarify the development historyof stakeholder theory, summarize the core of the theory. Based on variousdefinitions of stakeholder given by western scholars,the dissertationproposes that stakeholders are those individuals and groups,who can influenceand be influenced by the process of achieving the goal of the firm, and havesome firm-specific investments and bear some risks accordingly.Subsequently,the dissertation classifies stakeholders into 2 categoriesfrom the point of view of corporate governance: participants in governancevs. proteges whose interests are protected.Then the dissertation laysemphasis on the rational distribution of residual rights of the firm betweenparticipants in governance,points out that the distribution of residualrights depends on negotiating power of each party.And the dissertation makesfurther discussion on factors which influnce negotiating power.The research on stakeholder issues of enterprises needs to be furthered.The theory system of stakeholder theory needs to be completed from differentaspects in future researches adopting positive studies. More researchesshould be centralized on the application of stakeholder theory in thearrangement of corporate governance structure concerned of the situation ofChina.