Shareholder corporate governance, Stakeholder corporate governance and the current situation in the UK (PDF)

Essay from the year 2015 in the subject Economics - Case Scenarios, grade: 1,0, Edinburgh Napier University, language: English, abstract: Although the beginning of the banking crisis, where some banks needed a bailout by taxpayers, is seven years ago, the consequences are still observable in the global economy. Further, the crisis pointed out the grievances of actual regulations as well as succinctly regulated corporate governance.

While some economists argue that the banking crisis is evidence that the shareholder theory failed and a shift towards a more stakeholder oriented theory is indispensable, others note that the shareholder theory is still applicable by pointing out that the managers did not act in the intention of the shareholder theory by contravening basic principles of the theory. The bailout by taxpayers further extended the discussion that not only should the managers reconsider several aspects, but also the policy makers who initially had the obligation to prevent the scenario, where banks needed to be bailed out by stakeholders.

This essay will first provide an overview of stakeholder corporate governance as well as shareholder corporate governance theory and the associated critiques. Further this essay takes a glance into the practice by reporting the influences of corporate governance towards the financial crisis with a special focus on the UK. Finally, the essay will conclude possible changes towards corporate governance to prevent crises in the future.