Shareholder Value and the Stakeholder Debate in the UK

Shareholder value is assumed to be the ruling idea in Anglo‐American corporate governance. This paper first reviews the historical origins of the idea of shareholder value in the UK and the particular theoretical assumptions about the company which underpin it. It assesses the reasons why it was subjected to so little subsequent political challenge, and contrasts this with US experience. This historical and theoretical context is then used to explore the current debate on stakeholding in the UK, whether the UK system of corporate governance needs reform, and if so in which direction. Four main positions on stakeholding are identified – property rights, enlightened managerialism, active shareholders, and corporate pluralism. The paper concludes with an assessment of the political and legal pressures for reform of the UK model of corporate governance and the prospects for any significant change.