Abstract
This paper provides a new theoretical foundation for analysing corporate governance regimes through the lens of Amartya Sen’s capability approach. By developing the concept of capabilities-as-entitlements, we reframe corporate governance as a structure of legal entitlements – essentially liberties versus residual control rights (à la Oliver Hart) - allocated to various stakeholders and corresponding to Sen’s notion of capability. In order to accomplish this, we propose the distinction between minimal (necessary) and sufficient conditions for having stakeholders’ capabilities. This framework offers a legal, economic and philosophical basis for understanding how corporate governance impacts stakeholders’ capabilities and well-being as well as how corporate hierarchy should be constrained to enhance stakeholders’ capabilities.