The debate with a false premise and the downside of law
reform
Introduction
During the Banking Royal Commission, outgoing NAB chairman Ken
Henry said directors should understand 'their responsibilities
to the community go beyond their obvious responsibilities for
shareholders'.
That sparked a flurry of commentary suggesting Dr Henry's
remarks reflected a drastic shift in the existing 'shareholder
primacy' approach, an interpretation dependent on the
assumption that shareholder primacy requires directors to act
solely in the interests of shareholders because the
interests of shareholders and other stakeholders are necessarily
in conflict.
More recently, on 19 August 2019, the US Business Roundtable
released a revised 'Statement on the Purpose of a
Corporation', with the Roundtable's 181 CEO members (who
represent some of the biggest companies in America) saying they
'share a fundamental commitment to all our
stakeholders'.
