Stewardship Theory or Agency Theory: CEO Governance and Shareholder Returns

Lex Donaldson and James H. Davis
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Lex Donaldson: Australian Graduate School of Management, University of New South Wales, PO Box 1, Kensington NSW 2033.
James H. Davis: for Merly 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, U.S.A.

Australian Journal of Management, 1991, vol. 16, issue 1, 49-64

Abstract: Agency theory argues that shareholder interests require protection by separation of incumbency of rôles of board chair and CEO. Stewardship theory argues shareholder interests are maximised by shared incumbency of these rôles. 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 (search for similar items in EconPapers)
Date: 1991
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Citations: View citations in EconPapers (203)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:ausman:v:16:y:1991:i:1:p:49-64

DOI: 10.1177/031289629101600103

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