Shareholders and Stakeholders: How Do Directors Decide?

Strategic Management Journal, Forthcoming

25 Pages Posted: 18 Oct 2010 Last revised: 20 Jun 2019

See all articles by Renee B. Adams

Renee B. Adams

University of Oxford; 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

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Abstract

This study examines 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: shareholderism, stakeholders, directors, values, corporate governance

JEL Classification: K22, M14

Suggested Citation

Adams, Renée B. and Licht, Amir N. and Sagiv, Lilach, Shareholders and Stakeholders: How Do Directors Decide?. Strategic Management Journal, Forthcoming, Available at SSRN: https://ssrn.com/abstract=1693668

Renée B. Adams

University of Oxford ( email )

Park End Street
Oxford, OX1 1HP
Great Britain

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 )

8 University Street
Herzliya, 4610101
Israel
972-9-952-7332 (Phone)

European Corporate Governance Institute (ECGI)

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 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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