Understanding the effects of regulation on managerial perceptions of stakeholder salience

Abstract

The increase in banking regulation globally is a rising trend and is demanding more time and attention from senior management. The aim of the case study is to analyse and asses the effects of banking sector regulations and corporate governance on the prioritisation of stakeholders by senior management. The role of senior management is to enter into contracts with the owners of the company to act as agents for the organisation. It is then the responsibility of management to establish contracts with various other stakeholders of the organisation. The responsibility of bank management is becoming more complex and senior management have the unenviable task of identifying and prioritising stakeholders based on how they perceive stakeholder salience as described in stakeholder theory. The research attempts to prove that managerial perception of stakeholder salience is affected by the regulatory institutions and the legislation, statutes and regulations that they enact, both internationally and locally. It is therefore critical for management to be aware of rate of change and frequency change in the regulatory environment to ascertain its ongoing effects on stakeholder salience to an organisation. The case study is specifically focussed towards the banking industry, but aims to contribute to understanding the effects of regulation on managerial perception on stakeholder salience which could be accepted in other highly regulated industries.