Exploring the rationale of enlightened shareholder value in the realm of UK company law – the path dependence perspective

Wen, S and Zhao, J 2011, 'Exploring the rationale of enlightened shareholder value in the realm of UK company law – the path dependence perspective' , International Trade and Business Law Review, 14 .

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Despite conventional beliefs in the predominance of shareholder value, a broader agenda of stakeholder consideration has been advocated in the UK by the recently-introduced ESV principle – the overriding corporate objective in the new company law regime. In this paper, the efficiency of this principle in terms of stakeholder enhancement is challenged through an interdisciplinary analysis. Through a critical review of the ESV principle, it is discovered that stakeholder enhancement practices in the context of the 2006 company law regime are still for the fundamental goal of shareholder value maximisation, and that their enlightened impact has been fairly limited in practice. Furthermore, by revisiting the interrelationships between UK economic, political and cultural factors with the predominance objective of shareholder value maximisation in the Companies Act 2006, it is discovered that the enlightened effect of this new approach in the company law regime is in fact impeded by strong, persistent forces deriving from shareholder-oriented particulars. Providing insight into the future direction of corporate governance practice, the paper concludes the rationale behind the shareholder-oriented ESV principle, and further suggests the continuing predominance of shareholder value in UK corporate governance.

Item Type: Article
Themes: Media, Digital Technology and the Creative Economy
Schools: Schools > Salford Business School > Salford Business School Research Centre
Journal or Publication Title: International Trade and Business Law Review
Publisher: Murdoch Law School
Refereed: Yes
ISSN: 1836-8573
Related URLs:
Depositing User: Users 47901 not found.
Date Deposited: 18 May 2011 11:12
Last Modified: 15 Feb 2022 15:54
URI: https://usir.salford.ac.uk/id/eprint/15818

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