Value-added distribution to stakeholder of Spanish listed companies: a corporate governance perspective

Abstract

Following a stakeholder corporate governance perspective, we examine whether the characteristics of boards of directors (board size, separation of Chairman and CEO roles, independent directors and board ownership) have an impact on the value-added distribution to stakeholders, who are differentiated as shareholders and other primary stakeholders (workers, creditors and government), and if these characteristics could contribute to a more equitable distribution of the value added. Considering that the main concern of the primary stakeholders is the distribution of wealth, we focus our approaches on the value-added distribution as a proxy for the primary stakeholders interests. We conduct a panel data analysis of 438 observations of Spanish listed firms during the period 2007–2012 and test various models that offer new insights into stakeholder perspectives. The results show that within the context of ownership concentration and with a unitary board system of corporate governance, the incorporation of independent directors on the Board and the separation of power (between Chairman and CEO) are important corporate control mechanisms with which to defend the interests of other primary stakeholders (workers, creditors and government). In addition, the results highlight that regulators and shareholders should be wary of excessive board ownership and oversized boards, as these may contribute to exacerbating the conflict of interests between shareholders and other primary stakeholders. These results contribute to the debate concerning the dichotomized approach of corporate governance (shareholders/stakeholders corporate governance).