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Corporate Governance: Stewardship Theory

"a steward protects and maximizes shareholders wealth through firm performance, because by so doing, the steward's utility functions are maximized" - Davis, Schoorman & Donaldson (1997)

  • Creates a structure between managers and owners to create harmonization
  • Emphasizes the role of the CEO as "unambiguous and unchallenged"
  • Gives unity of direction and strong command
  • Motivates employees
  • The role of the 'steward' is over-simplified and unrealistic
  • The theory reinforces the egos of senior executives
  • The needs model is unrealistic
  • Lack of empirical evidence
  • Having a CEO who is not chairman

Why would Stewardship Theory be superior to other theories?

Disadvantages of Stewardship Theory

Advantages of Stewardship theory

What is Stewardship theory?

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