Shareholders and Stakeholders around the World: The Role of Values, Culture, and Law in Directors’ Decisions

Amir Licht, Renee Adams

Series number :

Serial Number:

459/2019

Date posted :

June 24 2019

Last revised :

July 01 2019

SSRN

Keywords

shareholderism •
Stakeholders •
directors •
values •
culture •
social norms •
law •
regulation •
preferences •
Institutions •
Corporate governance •
CSR •
Entrepreneurship

This study sets out to examine the relative importance of legal versus cultural institutions and personal values for strategy and corporate governance. We present first evidence on the way personal and institutional factors together guide public company directors in decision-making concerning shareholders and stakeholders.

In a sample comprising more than nine hundred directors from over fifty countries of origin, we confirm that directors universally hold a principled, quasi-ideological stance towards shareholders and stakeholders, called shareholderism. Directors’ shareholderism correlates systematically not only with personal values but also with cultural norms that are consistent with entrepreneurship. Among legal factors, only creditor protection exhibits a negative correlation with shareholderism, as theory would suggest, while general legal origin and proxies for shareholder and employee protection are unrelated to it. Personal values and cultural norms thus appear to dominate legal rules in shaping directors’ shareholderism stances.

View full abstract