From a Shareholder to Stakeholder Orientation : Evidence from the Analyses of Chief Executive Dismissal in Large U.S. Firms

The post-Enron era is marked with growing discourse of stakeholders, sustainability, and corporate social responsibility (CSR). Commentators debate whether U.S. corporations have indeed moved towards a stakeholder orientation, given the difficulties in measuring such a shift. We assess this shift by examining corporate governance practices, especially the prevalence of shareholder- and stakeholder-oriented practices in CEO dismissals. Using data on large firms in 1980–2015, we found that, before the 2000s, CEOs were less heavily penalized for poor firm performance when they demonstrated a shareholder orientation by downsizing and refocusing the corporation and more heavily penalized for CSR activity. This trend, however, reversed after the early 2000s. This paper provides evidence of the evolution of U.S. firms’ governance practices from a shareholder towards stakeholder orientation