STRATEGY highlight 2.1
AGENCY THEORY VERSUS STEWARDSHIP THEORY IN CORPORATE GOVERNANCE
Managers of large, modern publicly held corporations aretypically not the owners. In fact, most of today’s top managers own only nominal amounts of stock in the corporation they manage. The real owners (shareholders) elect boards of directors who hire managers as their agentsto run the firm’s day-to-day activities. Once hired, how trustworthy are these executives ? Do they put themselves or the firm first?