Shareholders and Stakeholders: How Do Directors Decide?

51 Pages Posted: 8 Feb 2010 Last revised: 23 Jul 2012

Renee B. Adams

University of New South Wales, Department of Banking and Finance; ECGI; FIRN; ABFER

Amir N. Licht

Interdisciplinary Center (IDC) Herzliyah - Radzyner School of Law; European Corporate Governance Institute (ECGI)

Lilach Sagiv

Hebrew University of Jerusalem - Jerusalem School of Business Administration

Multiple version iconThere are 2 versions of this paper

Date Written: March 2010

Abstract

This study investigates how directors make decisions that involve shareholders and other stakeholders. Using vignettes derived from seminal court cases, we construct an index of directors’ shareholderism as a general orientation on this issue. In a survey of the entire population of directors and CEOs in public corporations in one country, we find that directors’ personal values and roles play an important part in their decisions. Directors and CEOs are more pro-shareholder the more they endorse entrepreneurial values - specifically, higher achievement, power, and self-direction values and lower universalism values. While employee representative directors exhibit a lower baseline level of shareholder orientation, they nonetheless often side with shareholders.

Keywords: Corporate Governance, Shareholderism, Stakeholders, Values

JEL Classification: K22, M14

Suggested Citation

Adams, Renee B. and Licht, Amir N. and Sagiv, Lilach, Shareholders and Stakeholders: How Do Directors Decide? (March 2010). ECGI - Finance Working Paper No. 276/2010. Available at SSRN: https://ssrn.com/abstract=1549482 or http://dx.doi.org/10.2139/ssrn.1549482

Renée B. Adams

University of New South Wales, Department of Banking and Finance ( email )

Sydney, NSW 2052
Australia
+61(2)93854280 (Phone)

ECGI

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

FIRN

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

ABFER

BIZ 2 Storey 4, 04-05
1 Business Link
Singapore, 117592
Singapore

Amir N. Licht (Contact Author)

Interdisciplinary Center (IDC) Herzliyah - Radzyner School of Law ( email )

P.O. Box 167
Herzliya, 46150
Israel
972-9-952-7332 (Phone)
952-9-9513323 (Fax)

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium
952-9-9513323 (Fax)

HOME PAGE: http:/www.ecgi.org

Lilach Sagiv

Hebrew University of Jerusalem - Jerusalem School of Business Administration ( email )

Mount Scopus
Jerusalem, 91905
Israel
972 2 652 1841 (Phone)

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