agency conflict

Hi, I hope that these extracts from a SBL technical article could help you.

Who’s who: the stakeholder/stockholder debate

Essentially, proponents of the stockholder theory argue that because organisations are ‘owned’ by their principals, the agents (directors) have a moral and legal duty to only take account of principals’ claims when setting objectives and making decisions. Hence, for a joint stock business such as a public company, it may be assumed that because principals (shareholders) seek to maximise their returns, the sole duty of agents is to act in such a way as to achieve that.

Stakeholder theorists, in contrast, argue that because a business organisation is a citizen of society, enjoying its protection, support and benefits, it has a duty to recognise a plurality of claims in the same way that an individual might act as a ‘responsible citizen’. In effect, this means recognising claims in addition to those of shareholders when reaching decisions and deciding on strategies.

and this also:

Pristine capitalists

At the extreme stockholder end is the pristine capitalist position. The value underpinning this position is shareholder wealth maximisation, and implicit within it is the view that anything that reduces potential shareholder wealth is effectively theft from shareholders. Because shareholders have risked their own money to invest in a business, and it is they who are the legal owners, only they have any right to determine the objectives and strategies of the business. Agents (directors) that take actions, perhaps in the name of social responsibility, that may reduce the value of the return to shareholders, are acting without mandate and destroying value for shareholders.