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Exploring the rationale of enlightened shareholder value (ESV) in the realm of UK company law: the path dependence perspective
journal contribution
posted on 2023-06-08, 14:19 authored by Shuangge Wen, Jingchen ZhaoDespite 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.
History
Publication status
- Published
Journal
International Trade and Business Law ReviewISSN
1836-8573Publisher
Murdoch Law SchoolVolume
14Page range
153-174Department affiliated with
- Law Publications
Full text available
- No
Peer reviewed?
- Yes
Legacy Posted Date
2013-02-04Usage metrics
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