Referencing Styles : Harvard Abstract: This paper examines the role of the corporate objective function in increasing corporate productivity, social welfare, and the accountability of managers and directors. Because it is logically impossible to maximise in more than one dimension, purposeful behavior requires a “single-valued” objective function. Two hundred years of work in economics and finance implies that, in the absence of externalities and monopoly, social welfare is maximised when each firm in an economy … View More Abstract: This paper examines the role of the corporate objective function in increasing corporate productivity, social welfare, and the accountability of managers and directors. Because it is logically impossible to maximise in more than one dimension, purposeful behavior requires a “single-valued” objective function. Two hundred years of work in economics and finance implies that, in the absence of externalities and monopoly, social welfare is maximised when each firm in an economy aims to maximise its total market value. The main contender to value maximisation is stakeholder theory, which argues that managers should attempt to balance the interests of all corporate stakeholders, including not only financial claimants, but employees, customers, communities, and governmental officials. By refusing to specify how to make the necessary tradeoffs among these competing interests, the advocates of stakeholder theory leave managers with a theory that makes it impossible for them to make purposeful decisions. With no clear way to keep score, stakeholder theory effectively makes managers unaccountable for their actions (which helps explain the theory’s popularity among many managers). But if value creation is the overarching corporate goal, the process of creating value involves much more than simply holding up value maximisation as the organisational objective. As a statement of corporate purpose or vision, value maximisation is not likely to tap into the energy and enthusiasm of employees and managers. Thus, in addition to setting up value maximisation as the corporate scorecard, top management must provide a corporate vision, strategy, and tactics that will unite all the firm’s constituencies in its efforts to compete and add value for investors. Abstract: The current debate and theorising on corporate governance has been polarised between a shareholder perspective and a stakeholder perspective. While advocates and supporters of each camp attempt to justify the superiority, rationality and universality of each model in theory, they rarely pay attention to the age-old conceptions, assumptions and presuppositions underpinning their perspectives, which are less credible and valid in matching the continually changing practice of corporate governance. This paper serves as a survey and critical review of major current theories on corporate governance. In so doing, it reveals the inadequacy of conventional approaches employed in corporate governance theorising. It calls for a new mode of thinking in analysing corporate governance and concludes by outlining a new direction of research in this field. Read Less