Managing Stakeholder Expectations

Sandra Dow

Introduction

The 2008 financial crisis shook the global financial system and arrested economic growth. At the epicenter of the financial crisis were the too-big-to-fail financial institutions (TBTFs), which included AIG, Lehman Brothers, Merrill Lynch, Bear Stearns, Countrywide Financial, JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, State Street, Goldman Sachs, Bank of New York Mellon and Morgan Stanley. In this chapter we explore whether these TBTFs met stakeholder expectations in the period preceding the crisis, at the crisis and during the post-crisis fallout. We argue that the failures in corporate governance in the financial services sector that led to excessive risk taking seem to have spilled over to treatment of other stakeholders.

Banks¹¹We use “banks” and “financial services” interchangeably. are financial intermediaries and this intermediation function exposes them to an array of significant stakeholder issues likely unparalleled in other industries. One perspective could suggest that, since they are intermediaries, the reputations of these stakeholders may be as critical to the reputation of the bank as those reputational issues that may be internally