AGENCY THEORY, ETHICS AND CORPORATE GOVERNANCE

This paper is an exploration of the potential place, if any, for ethics in corporate governance. It begins with the influential role that agency theory has played both in the conception and reform of corporate governance. Its grounding assumption of self-interested opportunism leaves little or no room for ethics beyond what pays. This conception is then contrasted with a Foucauldian view of governance in which ethics is explored in terms of how an `ethic' of shareholder value has been promulgated in the last decade. The third section of the paper explores the contemporaneous explosion of interest in corporate ethics and social responsibility and suggests that there is a nascent disciplinary regime being assembled which may redefine the terms of shareholder value to include environmental and social performance. What is paradoxical about both an ethics of shareholder value and corporate responsibility is that they are effective only through creating a preoccupation with the self and how the self is seen, rather than the other. The final concluding part of the paper suggests that ethics, following Levinas, should be understood in terms of sentience and the `responsibility for my neighbour' that this assigns. Such a view of ethics refutes the individualism that agency theory takes as the essence of human nature, and Foucauldian analysis suggests is the product of disciplinary processes. Its grounding in sentience and proximity however offer it only a local role in corporate governance.