Employees as Corporate Stakeholders

Enron offers a prime case study to explore the many failures of the modern corporation to treat its employees even-handedly, ethically and with respect. Employees make significant personal investments into the corporations they work for, but employee interests are rarely of concern to directors. This paper analyses several theories on the nature and purpose of the corporation and argues that the interests of stakeholders other than shareholders ought to be legally recognised in the corporation. The paper examines three theories on employees and employment, and argues that the human capital theory is most meaningful and best reflects the role of the employee when that employee is analyzed in a broad social, political and economic context. The authors evaluate reforms, such as stakeholder statutes, which have been implemented in various jurisdictions, and set out specific amendments that ought to be implemented to recognise the status of the employee as an important stakeholder in the modern corporation