Stakeholder Equity

Abstract: Pay inequality, tax avoidance, abuse of superior bargaining power, pollution…the list of corporate misdeeds keeps growing. No company wants to be labelled as being guilty of these practices. Therefore some mention of corporate social responsibility has become de rigueur in corporate annual reports. But short of making high sounding declarations how can a company show that its practices have been fair and socially responsible? This article starts with the premise that society, employees, suppliers, creditors and shareholders have a collective stake in the wellbeing of the company, and that the company’s performance should be judged by its returns to all stakeholders. This view contrasts with the usual shareholder centric measurements of corporate performance. This article demonstrates that it is feasible, by using information that is available in a corporation’s annual report, and in particular information in its financial statements, to measure corporate performance that maximises returns to all stakeholders.