The Impact of Stewardship on Firm Performance: A Family Ownership and Internal Governance Perspective
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Current research in corporate governance focuses primarily upon minimization of agency costs in the shareholder-management relationship. In this dissertation, I examine a complimentary perspective based upon stewardship theory. The model developed herein leverages past research on socioemotional wealth to identify CEO attributes associated with stewardship behavior. I examine whether these attributes lead to positive firm performance. Moreover, I examine how family ownership and board of director characteristics influences the CEO stewardship – firm performance relationship. A 3-year unbalanced panel dataset using 268 S&P 1500 firms is analyzed using generalized least squares regression. All covariates lag the dependent variable by 1-year; constructs are included to control for popular agency prescriptions used to monitor, control, and incentivize executives. I find no relationship between the hypothesized constructs related to CEO stewardship (board memberships, organizational identity, and board tenure) and firm performance (Tobin’s Q). However, results reveal family ownership positively moderates the relationship between the quantity of CEO board memberships and firm performance. Additionally, the presence of affiliated directors and community influential directors positively moderates the CEO board memberships-firm performance relationship. The presence of community influential directors also positively moderates the relationship between CEO organizational identity and firm performance. Results from this dissertation provide moderate support for stewardship theory as a compliment to agency theory in corporate governance literature. There is evidence that family ownership and board of director attributes strengthen the relationship between those CEO stewardship constructs and firm performance. However, lack of a direct relationship between the CEO stewardship constructs and firm performance suggest a need more fine-grained constructs that measure stewardship. A substantial amount of research exists in corporate governance using the principal-agent model. The research herein extends this research by using stewardship theory to compliment the dominant agency model. I hope this research encourages scholars to take an integrative approach by (1) taking a renewed look at alternate theories of corporate governance such as stewardship theory, and (2) continue work that focuses upon firm performance maximization through CEO stewardship as well as agency loss mitigation through monitoring and control of the CEO.
Wesley, Curtis Leonus (2010). The Impact of Stewardship on Firm Performance: A Family Ownership and Internal Governance Perspective. Doctoral dissertation, Texas A&M University. Available electronically from