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?