From Agency to Stakeholder Theory: Realigning Executives Focus

Abstract

Purpose – This paper develops a discussion for the shifting of focus of corporate executives from agency theory to stakeholder theory.

Design/methodology/approach – This study entails a literature review of the topic area.

Findings – The findings show that there is much benefit and correlation by realigning executives focus and remuneration incentives away from a pure agency theory model to a managerial model of stakeholder theory or more directly an ethical branch model of stakeholder theory.

Originality/value – The paper will be of vital importance to other academics looking at this question, and to both public and private sector entities.

Paper type – Literature Review.

Keywords: Executive Remuneration, Financial Performance, Agency Stakeholder Theory

JEL Classification: D21, D22, D31, D79, G35, L25, M41,