Deviations from Expected Stakeholder Management, Firm Value, and Corporate Governance

摘要

We propose that high-quality corporate governance may mitigate agency costs related to value-destroying investments in stakeholder management (SM). Using an unbalanced panel of 9,051 firm-year observations for 1,631 firms, we find that deviations from expected stakeholder management (ESM) are increasing in chief executive officer (CEO) portfolio delta. We find, however, that deviations from ESM are negatively related to proxies for effective board monitoring. We also document that the effect of governance mechanisms varies by industry (consumer or industrial orientation) and SM dimension. The results indicate that corporations with good governance pursue shareholder value maximization while constraining unnecessary investment in stakeholders.