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Behavioral Economics, Federalism and the Triumph of Stakeholder Theory

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Corporate Social Responsibility and Corporate Governance

Part of the book series: International Economic Association Series ((IEA))

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Abstract

As in the Cold War’s conclusion, when the Berlin Wall fell, stakeholder theory’s victory over financial agency theory occurred with a tumultuous event — the 2001 stock market crash. Financial agency theorists were left to concede that financial markets were less than perfect (Jensen, Murphy and Ruck, 2004; Jensen, 2002). Even Michael Jensen, agency theory’s most prominent apostle, proclaimed himself an ‘enlightened’ stakeholder advocate. This qualification permitted Jensen to distinguish himself from those managerial theorists who had for two decades resisted agency theory’s advance. Yet, his distance seems rather odd, given the recent widespread acceptance of behavioral economics and law. For, when these are incorporated into stakeholder theory, the contentious descriptive disagreements find a satisfactory resolution, leaving discord on that enduring ethical issue - a fair surplus divide.

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Authors
  1. Allen Kaufman
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  2. Ernie Englander
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Editor information

Editors and Affiliations

  1. University of Trento, Italy

    Lorenzo Sacconi (Professor of Economics and Unicredit Chair in Economic Ethics and Corporate Social Responsibility, director of EconomEtica) (Professor of Economics and Unicredit Chair in Economic Ethics and Corporate Social Responsibility, director of EconomEtica)

  2. Inter-university Research Center, University of Milan-Bicocca, Italy

    Lorenzo Sacconi (Professor of Economics and Unicredit Chair in Economic Ethics and Corporate Social Responsibility, director of EconomEtica) (Professor of Economics and Unicredit Chair in Economic Ethics and Corporate Social Responsibility, director of EconomEtica)

  3. Vanderbilt University Law School, USA

    Margaret Blair (Milton R. Underwood Chair in Free Enterprise) (Milton R. Underwood Chair in Free Enterprise)

  4. Darden School of Business, University of Virginia, USA

    R. Edward Freeman (University Professor and Elis and Signe Olsson Professor of Business Administration, Academic director of Business Roundtable Institute for Corporate Ethics, and a senior fellow of Olsson Center for Applied Ethics) (University Professor and Elis and Signe Olsson Professor of Business Administration, Academic director of Business Roundtable Institute for Corporate Ethics, and a senior fellow of Olsson Center for Applied Ethics)

  5. Department of Economic Policy, Finance and Development, University of Siena, Italy

    Alessandro Vercelli (Professor of Economics) (Professor of Economics)

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© 2011 International Economic Association

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Kaufman, A., Englander, E. (2011). Behavioral Economics, Federalism and the Triumph of Stakeholder Theory. In: Sacconi, L., Blair, M., Freeman, R.E., Vercelli, A. (eds) Corporate Social Responsibility and Corporate Governance. International Economic Association Series. Palgrave Macmillan, London. https://doi.org/10.1057/9780230302112_4

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