Stakeholders Approach to Corporate Governance ~ Exploring Corporate Governance

Also known as Purist Approach and considered as the ideal approach by proponents of corporate governance, this approach ordains that the Board of Directors should aim at formulating policies that provide for equal (or almost equal) care of the interests of all stakeholders (not just the shareholders). Ideal as it may sound, it is however not a practical approach for the simple reason that directors are elected by and accountable only to shareholders. This brings us to the third and most recommended approach.