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Research Summary: Using arguments derived from transactions cost economics and incomplete contract theory, this article shows that the assumption that shareholders are a firm's only residual claimants is logically inconsistent with resource‐based theory's model of profit generation. It follows from this conclusion that resource‐based theory's model of profit appropriation must incorporate a stakeholder perspective. Some theoretical and empirical implications of this conclusion for resource‐based theory's model of profit generation, profit appropriation, the role of managers and entrepreneurs in resource‐based theory, and how conflicting interests among stakeholders can be resolved are all discussed. Finally, some continuing differences between stakeholder theory and incorporating a stakeholder perspective into resource‐based theory's model of profit appropriation are also discussed. Managerial Summary: Some argue that since shareholders are the only stakeholder who have a claim on a firm's profits, managers should focus only on maximizing shareholder wealth. Not only will this satisfy shareholders, it will also satisfy a firm's other stakeholders, since—in principle—these other stakeholders get paid before shareholders. This article shows that this logic is deeply flawed. In particular, it shows that if the only stakeholder who has a claim on a firm's economic profits is shareholders, then—in most competitive settings—a firm will not be able to attract the kinds of resources it needs to generate these profits. To attract the kinds of resources that can generate profits, managers must recognize that stakeholders, besides shareholders, have claims on the profits that their resources help generate. This, in turn, suggests that managers seeking to generate economic profits must adopt a stakeholder perspective in how they manage their firm. This article explores the managerial implications of this conclusion.

Stigma has long been viewed by some as essential to discourage excessive claims, yet seen by others as a cause of non-take-up by people in need and as a form of symbolic violence. More recently, there has been a resurgence of interest in the links between shame and poverty (including the role of benefits), and particular concerns about media/political rhetoric in the UK. Yet while our knowledge of benefits stigma has been enhanced by theoretical/qualitative contributions, few quantitative studies examine its extent or patterning. This paper therefore reports the results of a 2012 nationally-representative survey in the UK. It finds sub-types of stigma are reported by 10–19 per cent for each benefit, but 34 per cent report either personal stigma (their own view) or stigmatisation (perceived stigma by others) for at least one benefit, and over one-quarter say a stigma-related reason would make them less likely to claim. One-third of claimants themselves report some degree of stigma around their claim. Against the predictions of ‘dependency culture’ claims, however, respondents in high-claim areas were more likely to stigmatise benefits, both before and after accounting for other factors. The paper concludes by considering lessons for future benefits stigma studies, and policy options to reduce benefits stigma.

We show that collateral plays an important role in the design of debt contracts, the provision of credit, and the incentives of lenders to monitor borrowers. Using a unique data set from a large bank containing timely assessments of collateral values, we find that the bank responded to a legal reform that exogenously reduced collateral values by increasing interest rates, tightening credit limits, and reducing the intensity of its monitoring of borrowers and collateral, spurring borrower delinquency on outstanding claims. We thus explain why banks are senior lenders and quantify the value of claimant priority.

While accepting Banton’s recently expressed view that sociology and social policy are distinct disciplines, this article argues that times of radical change can profitably bring the two into closer dialogue. Considering an argument from Emirbayer and Mische that agency becomes especially apparent in unsettled times, it focuses on conceptions of agency at play in the design and implementation of recent UK welfare reforms, and in subsequent legal challenges. Identifying a series of key measures in the Welfare Reform Act of 2012 and the Welfare and Work Act of 2016, this article examines the challenges that have ensued, and the way that agency is revealed as both a site of disciplinary control and as a focus for contestation, pitting the purposive rationality of welfare reform against the practical reason that emerges from claimant experience.

Political economy models view property rights as the linchpin to economic development. But strong property rights—defined as rules that provide greater compensation to a larger set of claimants—encourage opportunistic behaviors that undermine infrastructure investments. Strong rights lead to (1) holdout problems among existing property owners, (2) infrastructure trolls who occupy needed land, and (3) scope expansions in which communities demand unrelated local public goods. I draw on original qualitative research around highway projects in Colombia to illustrate how communities leverage their property rights to secure greater compensation and collective goods. A survey experiment supports the microfoundations of the theory: making salient strong property rights increases compensation demands and legal claims. State audit reports reveal that opportunistic behavior occurs on two-thirds of highway projects. These findings bolster a neglected view of strong property rights as a check on state-led economic development projects.

We study game-theoretic models of human evolution to analyze fundamentals of human nature. Rival-claimants games represent common situations in which animals can avoid conflict over valuable resources by mutually recognizing asymmetric claiming rights. Unlike social-dilemma games, rival-claimants games have multiple equilibria which create a rational role for communication, and so they may be good models for the role of language in human evolution. Many social animals avoid conflict by dominance rankings, but intelligence and language allow mutual recognition of more complex norms for determining political rank or economic ownership. Sophisticated forms of economic ownership could become more advantageous when bipedalism allowed adaptation of hands for manufacturing useful objects. Cultural norms for claiming rights could develop and persist across generations in communities where the young have an innate interest in learning from their elders about when one can appropriately claim desirable objects. Then competition across communities would favor cultures where claiming rights are earned by prosocial behavior, such as contributions to public goods. With the development of larger societies in which many local communities share a common culture, individuals would prefer to interact with strangers who identifiably share this culture, because shared cultural principles reduce risks of conflict in rival-claimants games.

We examine the causal effect of stakeholder orientation on firms’ cost of debt. Our test exploits the staggered state-level adoption of constituency statutes, which allows directors to consider stakeholders’ interests when making business decisions. We find a significant drop in loan spreads for firms incorporated in states that adopted such statutes relative to firms incorporated elsewhere. We further show that constituency statutes reduce the cost of debt through the channels of mitigating conflicts of interest between residual and fixed claimants and between holders of liquid claims and holders of illiquid claims, limiting legal liability and lowering takeover threats.

Does the rule of law matter to maritime security? One way into the question is to examine whether states show a discursive commitment that maritime security practices must comply with international law. International law thus provides tools for argument for or against the validity of certain practices. The proposition is thus not only that international law matters to maritime security, but legal argument does too. In this article, these claims will be explored in relation to the South China Sea dispute. The dispute involves Chinese claims to enjoy special rights within the ‘nine-dash line’ on official maps which appears to lay claim to much of the South China Sea. Within this area sovereignty remains disputed over numerous islands and other maritime features. Many of the claimant states have engaged in island-building activities, although none on the scale of China. Ideas matter in such contests, affecting perceptions of reality and of what is possible. International law provides one such set of ideas. Law may be a useful tool in consolidating gains or defeating a rival’s claims. For China, law is a key domain in which it is seeking to consolidate control over the South China Sea. The article places the relevant Chinese legal arguments in the context of China’s historic engagement with the law of the sea. It argues that the flaw in China’s approach has been to underestimate the extent to which it impinges on other states’ national interests in the maritime domain, interests they conceptualize in legal terms.

In this paper we examine how accounting conservatism affects the efficiency of debt contracting. We develop the statistical and informational properties of accounting reports under varying degrees of conditional and unconditional accounting conservatism, consistent with Basu's [1997] description of differential verifiability standards. Optimal debt covenants and interest rates on debt are derived from a natural tension between debt holders and equity claimants. We show how optimal covenants vary with the degree of conservatism and derive an efficiency metric that depends on the degree of conservatism. We find that accounting conservatism actually decreases the efficiency of debt contracts, contrary to the suggestions of Watts [2003] and contrary to the hypothesis in numerous empirical studies.

Since 2009, the UK has witnessed marked increases in the rate of sanctions applied to unemployment insurance claimants, as part of a wider agenda of austerity and welfare reform. In 2013, over one million sanctions were applied, stopping benefit payments for a minimum of four weeks and potentially leaving people facing economic hardship and driving them to use food banks. Here we explore whether sanctioning is associated with food bank use by linking data from The Trussell Trust Foodbank Network with records on sanctioning rates across 259 local authorities in the UK. After accounting for local authority differences and time trends, the rate of adults fed by food banks rose by an additional 3.36 adults per 100,000 (95% CI: 1.71 to 5.01) as the rate of sanctioning increased by 10 per 100,000 adults. The availability of food distribution sites affected how tightly sanctioning and food bank usage were associated (p < 0.001); in areas with few distribution sites, rising sanctions led to smaller increases in food bank usage. In conclusion, sanctioning is closely linked with rising food bank usage, but the impact of sanctioning on household food insecurity is not fully reflected in available data.