According to the Stewardship Theory of Corporate Governance which of the following statements are…
According to the Stewardship Theory of Corporate Governance (Donaldson and Davis, 1991), (a) the governance approach is rooted in sociology and psychology, (b) executives…
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According to the Stewardship Theory of Corporate Governance which of the following statements are relevant?
a. Governance approach is sociological and psychological.
b. Behaviour pattern is trustworthy.
c. The role of management is to monitor and control.
d. Owners attitude is to take risks.
e. Interests of the managers and principals converge.
Answer and explanation
Correct answer B
According to the Stewardship Theory of Corporate Governance (Donaldson and Davis, 1991), (a) the governance approach is rooted in sociology and psychology, (b) executives are intrinsically motivated, pro-organizational, and trustworthy stewards, (d) owners/principals empower stewards and accept risk, and (e) the interests of managers and principals converge, whereas (c) strict monitoring and control belongs to Agency Theory. Thus, 'a, b, d, e only' is correct.
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UGC NET Commerce