Drawing on ethical principles of fairness and integrative social contracts theory, moral obligations of fair dealing exist between the firm and all shareholders. This study investigates empirically whether privileged investors of publicly traded firms engage in legal, but morally questionable, trading that at the expense of non-privileged institutional or atomistic investors. In this context, we define privilege as the access to material, nonpublic earnings surprise information. Our results show that the opportunity for procedural unfairness increases with the presence of privileged (...) investors. However, this procedural unfairness does not appear to lead to distributive unfairness even though the level of abnormal trading also increases with the presence of privileged investors. That is, our findings suggest that other shareholders are in fact better off from an outcome perspective given that the abnormal stock price returns upon the announcement of an earnings surprise are either more positive or less negative when the firm has a high proportion of privileged investors. We extract the important implications of our study for future research on the fairness of capital markets and information asymmetry amongst classes of investors, as well as for public policy. (shrink)

Lack of specificity around stakeholder identity remains a serious obstacle to the further development of stakeholder theory andits adoption in actual practice by business managers. Nowhere is this shortcoming more evident than in stakeholder theory’s treatment of the constituency known as “community.”In this paper we attempt to set forth what we call “the Problem of Community” as indicative of the definitional problems of stakeholdertheory. We then begin the process of gaining greater specificity around our notions of community and the role (...) of community in stakeholder theory and management. In doing so, we identify the emergence of two fairly new forms of community that we believe are particularly relevant to the stakeholder theorist and practicing manager. These two new variants of community—the virtual advocacy group and the community of practice—extend the notion of community in new directions, which have strikingly different implications for stakeholder theory and practice. (shrink)

Within stakeholder literature, much attention has been given to which stakeholders "really count." This article strives to explain why organizational theorists should abandon the pursuit of "Who and What Really Counts" to challenge the assumption of a managerial perspective that defines stakeholder legitimacy. Reflecting on the paucity of employee rights and protections in marginalized work environments, I argue that as organizational researchers, we must recognize and take responsibility for the impact of our research models and visions. By confronting and rethinking (...) the foundational assumptions of stakeholder theory, business and society scholars can identify and pursue research questions that more effectively address contemporary social challenges. (shrink)

A substantial body of literature in the management discipline has evolved to make the case for and analyze the impacts of cross‐sector partnerships (CSPs). Yet, not all of these CSPs manifest the requisite collaborative propensities to achieve much more than superficial sustainability. Moreover, other disciplines like economics need to be brought to bear on analyses of such partnerships. In this article, we frame sustainable development challenges as collective action problems. We argue that over‐emphasizing the role of a single actor or (...) institution will not yield genuine sustainability. Instead, we propose that a collaborative orientation is necessary for business managers as they deal with challenges as expansive and complex as those presented by goals of the sustainability of the natural environment. Cross‐sector collaborative partnerships (CSCPs) are needed to achieve collective responsibility, wherein dialogic CSCPs issue in a new paradigm of collaborative markets. Market‐based solutions that ignore or minimize the important contributions that may be made by government, academia, and civil society organizations must give way to new models of collaboration across sectors. We identity specific challenges and opportunities for cross‐sector collaboration and provide case examples. There are important limits to addressing environmental and ethics problems from a single sector focus, and we show how meaningful sustainability can be facilitated within a dialogic cross‐sector collaborative perspective. (shrink)

The relationship between corporate executives and shareholders has riveted the attention of business ethicists since the inception of the field. Most ethicists agree that corporate executives owe their investors the duties of loyalty, candor, and care. These fiduciary duties undergird the promises made to shareholders at the time of incorporation, placing on executives moral obligations to engage in fair dealing and to avoid conflicts of interest.We concur that executives owe all of their existing shareholders both promise-keeping and fiduciary duties and (...) argue that some corporateexecutives violate these responsibilities by attempting to withhold information from or limit information to some shareholders while courting others. We analyze the ethical implications of six techniques and tools that executives use to attract certain types of shareholders while deterring others. We conclude with recommended structural and behavioral changes to these current managerial and investor practices. (shrink)

Although not always termed "organizational justice," the fairness of organizations has been a consistent concern of management thinkers. A review of the 1900-1965 time period indicates that management theorists primarily conceptualized organizational justice in utilitarian terms, although each theory emphasized distributive and procedural justice to different degrees. There is clearly a need for contemporary scholars to consider non-economic rationales for organizational justice, but the willingness of earlier scholars to make utilitarian arguments about organizational justice and productive efficiency helped legitimize the (...) idea of fairness in organizations as an arbiter of value. Further, each theory tempered absolute managerial autonomy with some inherent check thereon. Researchers interested in organizational justice should therefore take a historical perspective in considering how management theory includes consideration of justice-related concerns. (shrink)

This paper examines the role of vulnerability in the basis of business ethics by criticizing its role in giving a moral substantial character to fiduciary duties to shareholders. The target is Marcoux’s (Bus Ethics Q 13(1):1–24, 2003) argument for morally substantial fiduciary duties vis-à-vis the multifiduciary stakeholder theory. Rather than proceed to support the stakeholder paradigm, a conception of vulnerability is combined with Heath’s 2004) “market failure” view of the ethical obligations of managers as falling out of their roles as (...) professionals involved in the institution of the market. The result is the core of a theoretically defensible and managerially motivating and deployable ethic. (shrink)

This paper is intended to fill the gap in the literature on moral hazard amongst companies. It seeks to explore the moral hazard for companies by linking the leverage range with the risk involuntarily assumed by third parties. The paper takes the distinctive approach of trying to understand the nature of the moral hazard affected not only through asymmetries but also through lack of resources in companies. The paper also seeks to establish the importance of companies' moral hazard from an (...) ethical perspective and proposes an index –the moral hazard index– which provides the option of reducing risk when managers make decisions on leverage and equity levels; subsequently the assumed risk is controlled. An extreme case is set out of companies that have such high leverage that they survive with negative equity. In such cases the assumption of risk by third parties is undeniable. The paper explains the problem and shows the concern regarding company leverage. Although the index is still only theoretical, it offers opportunities for improvement to determine its applications and utility. Moral decisions are expected to be taken with regard to the structure of the capital of companies in order to reduce the risk assumed by third parties. (shrink)