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Whose interests are directors pursuing?
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AI
DOI：10.1007/s10997-026-09795-x.png)
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Abstract
En 中文
Whose interests do directors prioritize – investors, stakeholders, or the firm itself? Prominent theories have competing predictions, but the field’s reliance on archival proxy data makes it problematic to assess the decision processes of board members. Using qualitative data, we explore what guides decision-making by directors, and how they prioritize competing interests. Using interview data from 23 directors in five nations, we examine how director views triangulate with shareholder and stakeholder perspectives on governance. We find that directors’ views align poorly with both frameworks. Instead, directors pursue the interests of the firm, and pursue shareholders’ or stakeholders’ interests only when the latter are instrumental to achieving the interests of the firm. We show that directors’ decisions are not shaped by either agency theory or stakeholder theory logics, and that results are stable across different regions. Our findings are consistent with entity theory, a perspective that has gained traction among legal scholars, but has seen little use in other governance streams. The emphasis on the firm, versus share- and stake-holders, indicates that current theorizing does not accurately capture the decision processes used in boardrooms across the world. Our findings have important theory- building implications for the corporate governance literature and for policymakers and investors.
Keywords:
Agency theory
Board of directors
Abduction
Entity theory
Interviews
Stakeholder theory
Journal
J
IF:
4
Papers:
222
Citations:
2.1K