Corporate governance and stakeholder capitalism

Abstract

PurposeThe authors revisit the inquiry into the primacy of shareholders vis-à-vis stakeholders that has been debated since 19th Century. The authors consider B-business firms as the closest groups of firms that have considerable similarities to stakeholders' firms. The authors model the impact of being certified as stakeholders (B-business) firms in a worldwide environment.Design/methodology/approachEmploying daily returns data of B-corporations in a global setting during 2010–2021, the authors quantify and compare the firms' performance in the pre- and post-certified periods, measure the effect of their environmental social governance (ESG) scores on their performance and gauge the entire results on a standardized approach that yields easy interpretation.FindingsSubject to some caveats arising from limited coverage and the lack of data on proper control variables, the findings, based on the statistical significance of the estimated coefficients, do not indicate any changes in B-corporations' performance in their post-certification dates. Notwithstanding that, market factor appears to be the driving force consistently.Originality/valuePrior studies on B-corporations are overwhelmingly qualitative. The current study is the first study that evaluate performance of B-corporations' returns at firm level with daily data.

The transition towards benefit corporations: What are the roles for stakeholders?

“…Jones et al (2018) applied the lenses of instrumental stakeholder theory to demonstrate that the ability to create a close relationship with stakeholders can lead to a sustainable competitive advantage. Some authors have proposed the concept of stakeholder capitalism (Freeman et al, 2007;Shahrokhi et al, 2022), defined as capitalism that embeds CSR in the BM and corporate strategy (Evans et al, 2017;Freeman et al, 2017;Freudenreich et al, 2020). Evans et al (2017) explained how considering stakeholder interests in corporate strategy can create a basis for long-term enterprise success.…”

“…Some authors have proposed the concept of stakeholder capitalism (Freeman et al, 2007; Shahrokhi et al, 2022), defined as capitalism that embeds CSR in the BM and corporate strategy (Evans et al, 2017; Freeman et al, 2017; Freudenreich et al, 2020). Evans et al (2017) explained how considering stakeholder interests in corporate strategy can create a basis for long‐term enterprise success.…”

Guest editorial: Historical perspectives on corporate governance debate and introduction to the special issue on corporate governance and sustainability

“…The first two papers in this special issue have an international perspective. Shahrokhi et al. (2022) explore stakeholder firms in the form of B-corporations and quantify some aspects of these firms before and after B-certification, while considering the firms' ESG scores.…”

How AI affects the future relationship between corporate governance and financial markets: a note on impact capitalism

“…Second they announce greater transparency under corporate sustainability reporting directive (CSRD) and sustainability accounting standards board (SASB). In the short run, the stock market responds positively to such attempts, and in the long run, they achieve superior accounting performance, labor productivity, employee satisfaction, sales growth, and abnormal returns (Flammer, 2015(Flammer, , 2021Shahrokhi et al, 2022). Therefore, corporate social responsibility (CSR) causes higher financial strength, productivity, and success in private and public corporations, which means a higher reward and lower risk for the shareholders.…”

“…Second they announce greater transparency under corporate sustainability reporting directive (CSRD) and sustainability accounting standards board (SASB). In the short run, the stock market responds positively to such attempts, and in the long run, they achieve superior accounting performance, labor productivity, employee satisfaction, sales growth, and abnormal returns (Flammer, 2015, 2021; Shahrokhi et al. , 2022).…”