Transcription of Stewardship Theory or Agency Theory: CEO Governance and ...
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Stewardship Theory or Agency Theory: CEO Governance and ...
Stewardship Theory or Agency Theory : 3. CEO Governance and Shareholder Returns by Lex Donaldson . James H. Davis . Abstract: Agency Theory argues that shareholder interests require protection by separation of incumbency of ro les of board chair and CEO. Stewardship Theory argues shareholder interests are maximised by shared incumbency of these ro les. Results of an empirical test fail to support Agency Theory and provide some support for Stewardship Theory . Keywords: Stewardship Theory ; Agency Theory ; CEO; CHAIR OF BOARD;. SHAREHOLDER RETURNS; RETURN ON EQUITY. Australian Graduate School of Management, University of New South Wales, PO Box 1, Kensington NSW 2033. Formerly Department of Management and Organization, College of Business Administration, University of Iowa; Presently Department of Management, College of Business Administration, University of Notre Dame, Notre Dame, Indiana 46556, We should like to thank the following for their encouragement to our project of critically inquiring into the validity of the Agency Theory of management: Professors Chris Argyris, Alfred Chandler, Amitai Etzioni, Jerald Hage, Don McCloskey, Mancur Olson, Charles Perrow, Robert Tricker and David Whetten.
Vol.16, No.1 Donaldson & Davis: STEWARDSHIP THEORY the impartiality of the board is compromised. Agency and organisational economics theories predict that when the CEO also holds the dual roˆle of chair, then the interests of the owners will be sacrificed to a degree in favour of
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