agency1 - Agency Theory, Ethics and Corporate Governance....

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Agency Theory, Ethics and Corporate Governance. John Roberts The Judge Institute of Management University of Cambridge Visiting Fellow, AGSM, Sydney. Paper prepared for the Corporate Governance and Ethics Conference , Maquarie Graduate School of Management, Sydney, Australia. June 28-30 2004
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Abstract This paper is an exploration of the potential place, if any, for ethics in corporate governance. It begins with the influential role that agency theory has played both in the conception and reform of corporate governance. Its grounding assumption of self- interested opportunism leaves little or no room for ethics beyond what pays. This conception is then contrasted with a Foucauldian view of governance in which ethics is explored in terms of how an ‘ethic’ of shareholder value has been promulgated in the last decade. The third section of the paper explores the contemporaneous explosion of interest in corporate ethics and social responsibility and suggests that there is a nascent disciplinary regime being assembled which may redefine the terms of shareholder value to include environmental and social performance. What is uncomfortable about these accounts of how an ideal of both shareholder value and responsibility is made to play upon the minds of directors is that ethics comes to be understood and practised in terms of how the self is seen – the ethics of narcissus. The final concluding part of the paper suggests that ethics, following Levinas, should be understood in terms of sentience and the ‘responsibility for my neighbour’ that this assigns. Such a view of ethics refutes the individualism that agency theory take as a given of human nature, and Foucauldian analysis suggests is the product of disciplinary processes. Its grounding in sentience and proximity however offer it only a local role in corporate governance. Introduction As academics we are perhaps unused to seeing a direct impact from our abstract theorizing but in the case of agency theory one can point to the profound impact that its assumptions have had in both characterising and seeking to reform corporate governance practices. One of the reasons for the success of this theory is that it has kept a similar distance from actual board practices as those who are keen to understand and influence what goes on in boards – investors and those regulatory authorities who act principally on their behalf. Its negative assumptions about human nature, I would suggest, have a natural consonance with those who monitor boards remotely and who, as a result of this distance, are fearful that their interests are being abused. We could suggest that the value of the dismal assumptions of self-interested opportunism is that one’s confidence in others is seldom misplaced. Better to assume the worst than to become disillusioned by having one’s trust in distanced others abused. But in the paper that follows I want to argue that such fail safe pessimism is much more productive that it imagines itself to be. Rather than merely observe some
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 09/02/2011 for the course SOCIO 201 taught by Professor Johnsmith during the Spring '11 term at Rutgers.

Page1 / 18

agency1 - Agency Theory, Ethics and Corporate Governance....

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online