Materiality in Corporate Governance: The Statement of Significant Audiences and Materiality

14 Pages Posted: 2 Sep 2015

See all articles by Robert G. Eccles

Robert G. Eccles

University of Oxford - Said Business School

Timothy Youmans

CECP Strategic Investor Initiative; High Meadows Institute; MIT Sloan Family Office Program

Date Written: September 3, 2015

Abstract

Under the prevailing ideology of “shareholder primacy” most boards of directors believe that they are prevented from considering stakeholders other than shareholders in determining material issues and materiality for strategy and reporting. New research is showing that legal foundations exist for directors to indeed consider other stakeholders. To many boards, this is new thinking. In order to assist boards in this new realm of taking into account multi-stakeholder significance, we have structured this paper in four parts and a conclusion. In Part I we review fiduciary duty focusing on to whom this duty is owed. In Part II, we review the relevance of materiality in corporate governance. In Part III, we review our audience-focused materiality determination approach and in Part IV we discuss the new idea of an annual board “Statement of Significant Audiences and Materiality.” We conclude with some preliminary research results, ideas for future research, and next steps.

Suggested Citation

Eccles, Robert G. and Youmans, Timothy, Materiality in Corporate Governance: The Statement of Significant Audiences and Materiality (September 3, 2015). Harvard Business School General Management Unit Working Paper No. 16-023, Available at SSRN: https://ssrn.com/abstract=2654199 or http://dx.doi.org/10.2139/ssrn.2654199

Robert G. Eccles (Contact Author)

University of Oxford - Said Business School ( email )

Park End Street
Oxford, OX1 1HP
Great Britain

Timothy Youmans

CECP Strategic Investor Initiative ( email )

5 Hanover Square, Suite 2102
New York, NY 10004
United States

High Meadows Institute ( email )

129 Newbury Street
Suite 400
Boston, MA 02116
United States

MIT Sloan Family Office Program ( email )

77 Massachusetts Ave. E62-663
Cambridge, MA 02142
United States

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