THE 6th Ayala Finex Finance Summit will be held on July 27 at the New World Hotel with the theme "From Stockholders to Stakeholders: the Future of Capitalism." It will challenge the traditional way of thinking that management's objective should be maximizing value for shareholders, which originates from Milton Friedman's 1970 article denouncing corporate "social responsibility" as a socialist doctrine. All of us who attended business school from that time, all the way to the early 2000s, embraced this as gospel truth. The invited speakers come from McKinsey and Co., the World Business Council for Development (WBCD), Ayala Corp., Grant Thornton (UK) and Shell Philippines.
Jon Canto of McKinsey will talk about the history and evolution of stakeholder theory. This concept of corporate governance seeks to ensure that an organization is directed for the benefit of shareholders as well as other stakeholders like employees, creditors, suppliers and the communities where the companies operate. The stakeholder-oriented governance model caught on primarily because it was observed that some corporations had lost the public purpose bestowed on them. Many focused too much on short-term results because this addressed markets and satisfied shareholders. For decades, it was an accepted belief that companies have a singular commitment to maximize the wealth of shareholders. In this paradigm, what companies and their managers do is dictated by the needs and demands of stockholders. This is measured by profits, earnings per share and stock price. This belief focuses on the concept that the interest of the owners take precedence and dictate management's actions.
Continue reading with one of these options:
Ad-free access
P 80 per month
(billed annually at P 960)
- Unlimited ad-free access to website articles
- Limited offer: Subscribe today and get digital edition access for free (accessible with up to 3 devices)