Abstract:
Whose interests should a corporation prioritize in its operations? Should the scope of corporate
governance be limited to safeguarding the interests of shareholders alone, or should it broaden its
perspective to encompass the interests of various stakeholder groups? Scholars of corporate
governance have been engaged in a long-standing debate for decades regarding this question. The
conventional "Shareholder Model," prevalent in Anglo-American countries, asserts that a firm's
primary emphasis should be on maximizing shareholders' wealth. In contrast, the "Stakeholder
Model," observed in countries such as Germany, Japan, and other parts of Continental Europe,
argues that a firm serves a broader purpose in society beyond solely maximizing shareholders'
wealth. According to this model, a company should prioritize not only the interests of shareholders
but also those of employees, customers, suppliers, local communities, and other stakeholders. In
Pakistan corporate sector is also facing the same problem in which corporation prioritize the
interest the shareholder over those of stakeholder leading to short term decision and neglect of
social responsibility and also effect the profitability and sustainability of companies. This main
objective of this thesis is to introduce each model and Pakistan corporate framework and to
recommend an ideal/suitable model for Pakistan that balance the interest of both shareholder and
stakeholder.
