Shareholders and Stakeholders around the World: The Role of Values, Culture, and Law in Directors’ Decisions

Abstract

This study sets out to examine the relative importance of legal and cultural institutions and personal values in directors’ discretion. We present first evidence on the way personal and institutional factors together guide public company directors in decision-making concerning shareholders and stakeholders. In a sample comprising more than nine hundred directors from over fifty countries of origin, we confirm that directors hold a principled, quasi-ideological stance towards shareholders and stakeholders, called shareholderism. Directors’ shareholderism correlates with personal values, but also with cultural norms that are consistent with entrepreneurship. Among legal factors, only creditor protection exhibits a negative correlation with shareholderism, as theory would suggest, while general legal origin and proxies for shareholder and employee protection are unrelated to it.