The Transition of Joint Stock Companies in Slovenia: Shareholder-Value Approach versus Stakeholder-Value Approach

In the shareholder theory of firms, the company's assets are the property of the shareholders, and managers are viewed as agents of the shareholders with all of the enforcement difficulties associated with agency relationships, but without legal obligations to any other stakeholder. An alternative view is the stakeholder theory of firms. The standard principal-agent paradigm can be expanded to the stakeholder agency problem. In this view, managers can be seen as the agents of all stakeholders. From the perspective of social responsibility, enlightened organizations view the internal and external environment as a variety of stakeholders.

This paper offers some insights into the characteristics of the corporate governance system in Slovenia. Its focus is on the relationship between governance and management. The authors tried to determine in their research the roles of various groups of stakeholders in Slovenian companies. The paper's conclusions are based on a longitudinal research method. The paper is the result of three consecutive research studies on the characteristics of corporate governance in Slovenia over the period from 1998 to 2006. The paper compares the results from studies conducted in 1998 and 2002 with the latest results in 2006. The most important long-term strategic objective of Slovenian companies is growth. The share of Slovenian companies - excluding equity opportunity costs - has decreased significantly in the last six years due to the consolidation of ownership structures. The controlling owners are more active in setting the required rate of return on their equity investments. There is no conflict of interest between internal and external shareholders in most companies. Obviously, Slovenian companies have changed their strategic behaviour to reflect the interests of their stakeholders. It may be argued that some stakeholders, like customers and employees, are even more important for Slovenian managers than the owners.