Directors Duties and Responsibilities Towards Other Stakeholders

A Discussion of Case Studies on Corporate Disasters

Abstract

Implications of corporate disasters as a result of irresponsible corporate actions/decisions have been significant. Impacts on the society and environment and their affects are seen after many years. Previous research on directors’ duties and responsibilities towards stakeholders other than shareholders is scarce, due to the reason that the legislative requirement of directors is to act in the best interests of shareholders. This paper explores the duties and responsibilities of directors and officers on environmental disaster and their impact on society and environment using a sample of 6 case studies around the world. The finding of this study shows that a shareholder primacy approach has negative impacts on the other stakeholders who are affected by the activities of the firm. Even though corporate governance codes refer to stakeholder interests, the focus of corporations’ laws is on shareholder value. Given that the impact of corporate disaster on society and environment is still happening even in 2013, this study recommends that the corporations law in relation to duties responsibilities directors’ and officers’ should be extended to other stakeholders other than the shareholders.