A Discussion of the Suitability of Only One vs More than One Theory for Depicting Corporate Governance

Abdullah Al Mamun, Qaiser Rafique Yasser, Md. Ashikur Rahman

Faculty of Economics and Business, Universiti Malaysia Sarawak (UNIMAS), Kuching, Malaysia.
Institute for Postgraduate Studies, Multimedia University, Putra Jaya, Malaysia.

DOI: 10.4236/me.2013.41005                

Abstract

Agency theory predicts that the Chief Executive Officer (CEO) and the chairman positions should be held by different individuals in order to protect shareholder’s interest. Though there are mixed evidences on CEO duality and firm performance, most research have found that there is negative relationship between CEO duality and firm performance.  Although, in the last decades of the twentieth century, agency theory became the dominant force in the theoretical understanding of corporate governance, it does not however cover all aspects of corporate governance. This paper aims to explore whether it is better to combine various theories in order to describe effective and good corporate governance or theorizing corporate governance based on one theory only. This will cover corporate governance theories which include agency theory, stakeholder theory, stewardship theory, and institutional theory.

Keywords

Corporate Governance; Agency Theory; Stakeholder Theory; Stewardship Theory and Institutional Theory

Conflicts of Interest

The authors declare no conflicts of interest.

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