The shareholder governance model aims at maximizing the interests of shareholders. Suppose that in a typical company, shareholders get "residual returns" and bear "residual risks", so as to maximize shareholder returns and social wealth. But there are two views on how to achieve this goal (Blair, 1995):
The first view: financial model.
It is believed that the company is owned by shareholders, and then the company should be managed according to the interests of shareholders, trying to make managers more responsible for the interests of shareholders (especially in burleigh and means enterprises). Supporters of the financial model believe that the best way to serve the interests of shareholders is to encourage by policies and maximize the short-term stock price, because they believe that today's stock price is the best market evaluation reflecting the company's future profits and growth. Its theoretical basis is "efficient market theory". Therefore, they advocate providing an unrestricted market for corporate control and increasing the rights of shareholders.
The second view: the market is short-sighted.
Market shortsightedness believes that the pressure of financial market makes company managers only pay attention to short-term interests, which will lead to the deviation of the company's long-term management decision, thus reducing the value of the company's long-term assets. Robert? Hayes and William? Robert Hayes and William Abernathy (1980) pointed out that American companies are suffering from "competitive myopia", which includes driving managers to pay too much attention to the return on investment based on short-term capital measurement as the evaluation standard of managers' performance.
Although financial model advocates hope to increase shareholders' supervision and influence on the company, market shortsighted people hope that corporate governance can protect managers under the pressure of shareholders, especially in the short-term stock price performance, or alternatively try to realize shareholders' interests by preventing transactions and encouraging long-term shareholding. But both of them think that the maximization of shareholders' interests can lead to the maximization of the interests of the whole society.
(b) Stakeholder governance and social wealth maximization
The stakeholder governance model holds that the maximization of social wealth should be the goal of corporate governance. Blair (1995) believes that in most modern companies, shareholders only bear limited responsibilities, and the risks of shareholders can be resolved by diversifying their investments, or they can choose to quit, and some residual risks have been transferred to creditors and other stakeholders. When shareholders do not bear all the residual risks, the assumption of shareholder governance model is untenable, and the maximization of social wealth cannot be promoted by maximizing shareholders' interests. Blair believes that although the assumption that shareholders get all residual income and bear all residual risks is flawed, joint-stock companies can maximize social wealth when those who supervise and control the company get (at least part of) residual income and bear (part of) residual risks, and those who share residual income and bear residual risks (stakeholders) are supervised. Cui Zhiyuan (1996) thinks that since 1980s, 29 states in the United States have revised their company laws, and the new company law requires managers to serve stakeholders, not just shareholders. Stiglitz (1995) thinks that a company has many stakeholders, and the company's goal is not to maximize the company's value, but to meet the different needs of many stakeholders, and the company's decision-making is the result of the joint efforts of many stakeholders. He thinks that the shareholder-centered theory ignores the interests of many stakeholders, including the government, and thinks the problem is too simple, while the stakeholder theory provides a better theoretical model for manufacturers.
The study of stakeholder theory promotes the change of corporate governance concept. People no longer limit the problem of corporate governance to the principal-agent relationship between owners and operators, but further realize that corporate governance is a system composed of various stakeholders.