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Firm Commitment: Why the Corporation is Failing Us and How to Restore Trust in It

Firm Commitment: Why the Corporation is Failing Us and How to Restore Trust in It Business Economics Vol. 49, No. 1 © National Association for Business Economics Book Review shareholder imperative, says Mayer, the fundamental Firm Commitment: Why the duty of company directors is to benefit shareholders Corporation is Failing Us and How to who have invested irrecoverable capital over which Restore Trust in It they have no contractual right of financial return. Employing the same logic, Mayer argues that company directors should have the same moral obligation to all stakeholders when directors commit capital over By Colin Mayer. 2013. Oxford, UK: Oxford University which stakeholders have no contractual right of recov- Press. Pp. 320. $26.96 hardcover. ery or financial return. These stakeholders include employees, suppliers, customers, residents, and com- Business Economics (2014) 49, 61–62. munities. Depending on the degree and extent of doi:10.1057/be.2014.4 the stakeholders’ commitment, the corporation must recognize these stakeholders’ moral rights ahead of the rights of shareholders. Moreover, says Mayer, while a corporation’s reputation can be tarnished when fraud is uncovered, resulting in higher cost of capital and n Firm Commitment, financial economist Colin lower market value, the stock market only inflicts I Mayer, former Dean and Professor of Management penalties on the corporation. It does not penalize Studies at http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Business Economics Springer Journals

Firm Commitment: Why the Corporation is Failing Us and How to Restore Trust in It

Hemphill, Thomas A
Business Economics , Volume 49 (1): 2 – Jan 1, 2014
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References (1)

Publisher
Springer Journals
Copyright
2014 National Association for Business Economics
ISSN
0007-666X
eISSN
1554-432X
DOI
10.1057/be.2014.4
Publisher site
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Abstract

Business Economics Vol. 49, No. 1 © National Association for Business Economics Book Review shareholder imperative, says Mayer, the fundamental Firm Commitment: Why the duty of company directors is to benefit shareholders Corporation is Failing Us and How to who have invested irrecoverable capital over which Restore Trust in It they have no contractual right of financial return. Employing the same logic, Mayer argues that company directors should have the same moral obligation to all stakeholders when directors commit capital over By Colin Mayer. 2013. Oxford, UK: Oxford University which stakeholders have no contractual right of recov- Press. Pp. 320. $26.96 hardcover. ery or financial return. These stakeholders include employees, suppliers, customers, residents, and com- Business Economics (2014) 49, 61–62. munities. Depending on the degree and extent of doi:10.1057/be.2014.4 the stakeholders’ commitment, the corporation must recognize these stakeholders’ moral rights ahead of the rights of shareholders. Moreover, says Mayer, while a corporation’s reputation can be tarnished when fraud is uncovered, resulting in higher cost of capital and n Firm Commitment, financial economist Colin lower market value, the stock market only inflicts I Mayer, former Dean and Professor of Management penalties on the corporation. It does not penalize Studies at

Journal

Business Economics – Springer Journals

Published: Jan 1, 2014

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