Alright, two questions -

1. So as I currently understand things, the main "problem" with stockholder theory is that if shareholders want their managers (agents) to make immoral decisions in order to maximize profit then the managers must do so and are considered blameless for their actions. Or essentially, if the people at the top want to be immoral, everyone else in the company is forced to be immoral as well and they can say as an excuse for their actions: "I was just doing my job."

Now obviously this wouldn't be a problem if all shareholders cared about morality as well as profit. So that means that it's not a problem with the system, but a problem with the individuals within the system UNLESS the system contains some sort of moral hazard that encourages shareholders to sneer at morality when profit is on the line. And I suppose it does...Companies can get away with a lot of immoral stuff and still make a profit because it's often hard to pinpoint the source of things like pollution on a company. (But then there is also the question of whether or not a certain amount of pollution is immoral since it can be argued that allowing companies to pollute at the profit-maximizing level will raise the standard of living for many people. That's an entirely different dicusission.) Well, I thought I had a question in there, but maybe not. Guess I was just fleshing out my thoughts.

2. (This one really is a question.) It seems to me that stockholder theory is really stakeholder theory with a normative core called: "profit maximization." If you think about it, managers working within a framework of stockholder theory DO balance the interests of competing stakeholders, they just do so according to a set of economic principles instead of a set of moral principles like environmentalism or feminism. If managers completely ignored the interests of customers, employees, suppliers, etc (stakeholders who are not shareholders) they would make no profit at all. So managers pay some attention to the interests of these stakeholders as well as to the interests of the stockholders. They pay everyone just the amount of attention that leads to maximization of profit. So is Freeman really saying that he accepts any normative core for stakeholder thoery besides an economic one? I don't think he ever specifies that the normative core has to be a set of morals...(If he does my point is null, but I didn't see that anywhere in the book and Humber seems to think Freeman allows for any normative core as well.)