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Enlightened shareholder value and the Companies Act 2006

The Companies Act 2006 aims to make a significant contribution to the corporate governance system in the UK by embedding in statute the concept of 'enlightened shareholder value'. The Act legally mandates shareholder value but with the proviso that it should be 'enlightened' by two statutes designed to promote an 'inclusive' approach towards the interests of stakeholders and to encourage a long term view to be taken of corporate investment. S.172(1) of the Act places an obligation on directors to 'have regard to' a range of other stakeholder interests in pursuit oftheir general duty 'to promote the success of the company' and SA17 (business review) sets out specific qualitative information which directors must include in their report to shareholders. This thesis describes a detailed empirical study of how a sample of FTSE 350 companies and major institutional investors have reacted to the two statutes. It complements the work of legal scholars who have variously described the enlightenment principle as little different from the shareholder model and as a 'third way', intermediate between the Anglo-US and stakeholder-orientated models of corporate governance. The study also explores the paradox at the heart of S.172(1), the outcome of which, together with a study of the literature, a review of the principal theories of governance and the empirical results enables a theory to be proposed which describes the enlightenment of shareholder value. This suggests that enlightenment is best viewed as a theory which aims to preserve the integrity of the shareholder model by mitigating against the possibility of market failure. Enlightened shareholder value is thus a complement to other institutional measures which encourage good governance for the benefit of shareholders and other stakeholders alike
Date January 2010
CreatorsTaylor, Peter Neil
PublisherBirkbeck (University of London)
Source SetsEthos UK
Detected LanguageEnglish
TypeElectronic Thesis or Dissertation

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