Journal of Financial and Quantitative Analysis Vol. 60 No. 1 2025
Stakeholder Value: A Convenient Excuse for Underperforming Managers?
Abstract
Firms falling short of earnings expectations are more likely to cite stakeholder-focused objectives in their public communications following earnings announcements. This behavior is consistent with managers preferring to be evaluated by subjective stakeholder-based performance criteria when falling short on objective shareholder-based measures. This increased use of stakeholder language is most evident among firms narrowly missing earnings estimates and appears unrelated to a firm’s actual environmental, social, and governance (ESG)-related activity. Stakeholder language appears to influence the evaluation of CEOs; turnover–performance sensitivity is lower for managers citing stakeholder value. Collectively, our findings are consistent with concerns that stakeholder objectives reduce managerial accountability for poor performance.
- DOI
- 10.1017/s0022109023001308
- Volume
- 60
- Issue
- 1
- Pages
- 135-168
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref