Stewardship theory: is board accountability necessary?

Abstract

Purpose -the objective of the paper is to demonstrate that notwithstanding the fact that stewardship theory embraces things like trust of directors, their professionalism, loyalty and willingness to be concerned for the interests of others, as well as rejecting the foundations of classic agency problems that are asserted by agency theory, board accountability is as relevant to stewardship theory as it is to agency theory.Design/methodology/approach -the paper applies the theory underlying board accountability in corporate governance, which is so often applied both in the corporate governance literature and in practice with agency theory in mind, to stewardship theory.Findings -While the idea of accountability of boards is generally associated with an explanation and conceptualisation of the role and behaviour of directors as agents within classic agency theory, the paper demonstrates that board accountability is a necessary part of board life even if the role of directors is explained and conceptualised in terms of stewardship theory.Practical Implications -The paper suggests some accountability mechanisms that might be employed in a stewardship approach Originality/value -while many authors have talked in general terms about board accountability and its importance, this is the first paper that has engaged in a substantial study that links board accountability directly with stewardship theory and to establish that accountability is necessary.

Characteristics of the Sharia Supervisory Board and Its Relevance to Islamic Social Reporting at Islamic Banks in Indonesia

“…Stewardship Theory is a depiction of the condition of managers who are motivated from the main results of the interests of the organization rather than motivated against his interests (Donaldson & Davis, 1991); (Davis et al, 1997); (Muth & Donaldson, 1998); ((Albrecht et al, 2004); Keay, 2017). The individual holds the agreement about the organization as a binding moral commitment between the two parties (Caldwell, Bischoff, & Karri, 2002) ; (Caldwell, Hayes, Bernal, & Karri, 2008).…”

STUDY ON THE FIDUCIARY ACCOUNTABILITY, SUSTAINABLE BUSINESS GROWTH IN THE LISTED COMPANIES AND SMEs

“…Moreover, the acceptability of heuristic affirms that accountability influences the concerned person to seek an alternative solution to mitigate (Tetlock., 1985). The recent study of accountability of directors argued that accountability is a continuous process and composes of four stages (Keay, 2015(Keay, , 2017bKeay & Loughrey, 2018). These include the decision made for the business is proper and a legal duty to disclose everything to the shareholders; the second stage is justification for their actions or whatever omissions and risks; evaluation of their outcome falls during the third stage; and finally, if their business judgment nurtured profit or losses, but not compulsorily, possibly to shoulder the outcome of their actions (Keay, 2017a).…”

“…Owing to this, the Board needs to achieve credibility and reputation as they are given the license to manage the company properly (Schillemans & Basuioc, 2015). Fiduciary accountability not only makes the board or a director accountable for their/his action but also promote the awareness of future market where their decisive role is primarily important in benefiting the corporation (Keay, 2017a;Schillemans & Basuioc, 2015).…”

The Fiduciary Accountability of Directors Ensuring Sustainable Business Growth in Public Listed Companies and SMES

“…The recent study of accountability of directors argued the accountability is a continuous process and composes of four stages (Keay, 2015). These include the decision made for the business is proper and a legal duty to disclose everything to the shareholders; the second stage is justification for their actions or whatever omissions and risks; evaluation of their outcome falls during the third stage; and finally if their business judgement nurtured profit or losses, but not compulsorily, possibly to shoulder the outcome of their actions (Keay, 2017). In the public service, officers while discharging their duties remain accountable for their wrong actions unless they can establish otherwise.…”