Theories of Corporate Governance

Theories of Corporate Governance
The philosophical foundations of corporate governance

Edited by Thomas Clarke

Contents

Preface Acknowledgements ‘Introduction: Theories of Governance – Reconceptualizing Corporate Governance Theory After the Enron Experience’ Thomas Clarke PART 1 ECONOMIC FOUNDATIONS

ix xi 1

31 34 45

‘The Managerial Revolution in American Business’ Alfred D. Chandler Jr ‘The Impact of the Corporation on Classical Economic Theory’ Adolf A. Berle PART 2 AGENCY THEORY

55 58 64 78

‘Theory of the Firm: Managerial Behaviour, Agency Costs and Ownership Structure’ Michael C. Jensen and William H. Meckling ‘Separation of Ownership and Control’ Eugene F. Fama and Michael C. Jensen ‘Agency Theory: An Assessment and Review’ Kathleen M. Eisenhardt PART 3 MANAGERIAL HEGEMONY

93 96 108

‘Directors: Myth and Reality’ Myles L. Mace ‘Pawns or Potentates: The Reality of America’s Corporate Boards’ Jay W. Lorsch and Elizabeth MacIver PART 4 STEWARDSHIP THEORY

115 118

‘Toward a Stewardship Theory of Management’ James H. Davis, F. David Schoorman and Lex Donaldson

vi

C O NTE NTS

PART 5

EXTERNAL PRESSURES

135 138

‘The Resource Dependence Role of Corporate Directors: Strategic Adaptation of Board Composition in Response to Environmental Change’ Amy J. Hillman, Albert A. Cannella Jr and Ramona L. Paetzold ‘Institutional and Strategic Choice Perspectives on Board Involvement in the Strategic Decision Process’ William Q. Judge Jr and Carl P. Zeithaml ‘A General Theory of Network Governance: Exchange Conditions and Social Mechanisms’ Candace Jones, William S. Hesterly and Stephen P. Borgatti

149

159

PART 6

STAKEHOLDER THEORY

171

‘Ownership and Control: Rethinking Corporate Governance for the Twenty-First Century’ Margaret M. Blair ‘The Stakeholder Corporation: A Business Philosophy for the Information Age’ Thomas Clarke

174 189

PART 7

THEORIES OF CONVERGENCE

203 206

‘Corporate Leadership