In a 1987 paper, available here, we argued that non-investor stakeholders play an important role in influencing financial policy and corporate valuation. We also distinguished explicit claims between a company and its counterparties from what we called implicit claims. In more recent years, there has been a growing focus on non-investor stakeholders and environmental, social, and governance (ESG) and, in particular, their role in creating corporate value. Left largely unexplained, though, is how this occurs. Here we argue that one of the keys is the distinction between explicit and implicit claims.
Explicit claims are familiar contracts. These include employment … Read more