An Empirical Test of Stewardship Theory

Davis, James H.; Frankforter, Steven A.; Vollrath, David A.; Hill, Vanessa

doi:10.58809/mesc2666

Cited by 10 publications

(7 citation statements)

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“…Board demographic diversity can enhance stewardship by improving a firm's decision-making process by means of diverse views, experiences and sensitiveness (Nguyen et al, 2021), thus broadening stewardship to benefit a wider range of stakeholders and the environment. Under this view, a longer board tenure reduces board's discussions and may uniform views and opinions inside the board (Davis et al, 2007), moderating the positive effect of demographic diversity on environmental performance. In family firms this implies an alignment to the owning family priorities and translates into a lower propensity to entrepreneurial risk (Huybrechts et al, 2013) and the pursuit of environmentally risky strategies.…”

Section: Theoretical Frameworkmentioning

confidence: 99%

The effect of board diversity and tenure on environmental performance. Evidence from family and non-family firms

Gavana,

Gottardo,

Moisello

2023

JFBM

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PurposeThe aim of this paper is to examine the effect of structural and demographic board diversity as well as board tenure on family firms' environmental performance, by analyzing the differences between family and non-family businesses and within family firms.Design/methodology/approachTobit regressions are applied to investigate the effect of independent directors, CEO non-duality, board gender diversity and board tenure on environmental performance. The study also controls for other board and firm characteristics, as well as for time, industry and country-fixed effects. In doing so, the authors rely on a sample of non-financial listed firms from France, Germany, Italy, Spain and Portugal over the period 2014–2021.FindingsThe authors find that women on the board positively influence environmental performance and this effect is significant only in family firms, although board tenure negatively moderates the relationship. Board independence significantly affects environmental performance only in non-family firms. A strong presence of family directors has a negative effect on family firms' environmental performance, especially when directors' turnover is low.Originality/valueThis paper examines the unexplored relationship between structural board diversity and environmental performance in family companies. This study provides empirical evidence on the association between gender diversity and family firms' environmental performance focusing for the first time on a European setting. Moreover, this study provides evidence of a different effect of board tenure in family and non-family businesses.

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Section: Theoretical Frameworkmentioning

confidence: 99%

The effect of board diversity and tenure on environmental performance. Evidence from family and non-family firms

Gavana,

Gottardo,

Moisello

2023

JFBM

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“…Stewardship theory provides a normative perspective of corporate governance in which stewards are intrinsically motivated to serve corporate stakeholders (Davis et al, 2007;Davis et al, 1997). Furthermore, the theory indicates that stewards in organisations with competing stakeholder objectives are motivated to make decisions that are in the best interests of the group (Davis et al, 1997).…”

Section: Stewardship Theory and The Role Of The Boardmentioning

confidence: 99%

“…Stewardship theory provides a normative perspective of corporate governance in which stewards are intrinsically motivated to serve corporate stakeholders (Davis et al. , 2007; Davis et al ., 1997).…”

Section: Background and Research Questionmentioning

confidence: 99%

Shareholder primacy or stakeholder pluralism? Environmental shareholder proposals and board responses

Carlisle,

Millar,

Jarosz Wukich

2023

AAAJ

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PurposeThis study examines shareholder and board motivations regarding corporate social responsibility (CSR) to understand boards' stewardship approaches to environmental issues.Design/methodology/approachUsing content analysis, the authors classify CSR motivations in all environmental shareholder proposals and board responses of Fortune 250 companies from 2013 to 2017 from do little (a shareholder primacy perspective) to do much (a stakeholder pluralism perspective). The authors calculate the motivational dissonance for each proposal-response pair (the Talk Gap) and use cluster analysis to observe evidence of board stewardship and subsequent environmental disclosure and performance (ED&P) changes.FindingsBoard interpretations of stewardship are not uniform, and they regularly extend to stakeholders beyond shareholders, most frequently including profit-oriented stakeholders (e.g. employees and customers). ED&P changes are highest when shareholders narrowly lead boards in CSR motivation and either request both action and information or information only. The authors observe weaker ED&P changes when shareholders request action and the dissonance between shareholders and boards is larger. When shareholders are motivated to do little for CSR, ED&P changes are weak, even when boards express more pluralistic motivations.Research limitations/implicationsThe results show the important role that boards play in CSR and may aid activist shareholders in determining how best to generate change in corporate CSR actions.Originality/valueThis study provides the first evidence of board stewardship at the proposal-response level. It measures shareholder and board CSR motivations, introduces the Talk Gap, and examines relationships among proposal characteristics, the Talk Gap, and subsequent ED&P change to better understand board stewardship of environmental issues.

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“…Stewardship theory highlights the board's duty as stewards of the bank, with a responsibility to act in the best interests of all stakeholders, including customers, staff, shareholders, and the larger community (Donaldson and Davis, 1989). An empirical test of stewardship theory (Davis et al, 2007) suggests that when principals and agents are aligned, it is because of some sort of psychological contract or because they have a very close relationship in which the agent acts in the best interests of the community and the firm and its shareholders. Successful board meetings can assist the board in fulfilling this obligation by fostering openness, accountability, and ethical behavior.…”

Section: Theoretical Literaturementioning

confidence: 99%

“…Consequently, it can be argued that larger boards are more advantageous for a significant number of financial firms. A study found that banks with larger boards tended to have lower risk-taking and higher profitability (Davis et al 2007). Additionally, having a more diverse board with members who bring different skills and perspectives has been found to improve bank performance (Adams and Ferreira, 2009).…”

Section: Berger Et Al (mentioning

confidence: 99%

Board Meeting Effectiveness and Bank Performance: Evidence from Sub-Saharan Africa

Boadi,

Dadzie,

Narteh-Yoe

et al. 2023

IJEFI

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The main objective of the study was to evaluate the effectiveness and performance of board meetings at banks in sub-Saharan Africa. The study adopted a quantitative research design and collected secondary data from the annual reports of 33 banks in sub-Saharan Africa to cover the period 2011–2020. To achieve its research objective, the study employed the two-step GMM regression model to examine the relationship between board meeting effectiveness and bank performance. A positive and statistically significant correlation between the effectiveness of board meetings and the financial success of banks was discovered in this research. Our results suggest that improving the efficiency of board meetings can be a viable strategy for boosting bank performance, which has significant ramifications for bank governance in sub-Saharan Africa.

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An Empirical Test of Stewardship Theory

Cited by 10 publications

References 0 publications

The effect of board diversity and tenure on environmental performance. Evidence from family and non-family firms

The effect of board diversity and tenure on environmental performance. Evidence from family and non-family firms

Shareholder primacy or stakeholder pluralism? Environmental shareholder proposals and board responses

Board Meeting Effectiveness and Bank Performance: Evidence from Sub-Saharan Africa

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