5.2 Corporate Governance: A Theoretical Perspective

The theories' menu (the exam's one-line-each): (1) agency theory (Jensen-and-Meckling's name: the principal-agent's costs-and-monitoring — the governance-as-contracting); (2) stewardship theory (the directors-as-trusted-stewards — the trust's-and-intrinsic-motivation's model); (3) stakeholder theory (Freeman's name: the multiple-principals' balancing — the company as the stakeholders' coalition); (4) transaction-cost theory (the governance-as-the-economics' economising); (5) resource-dependence theory (the board as the environment's bridge — the directors' networks-and-resources); (6) shareholder-vs-stakeholder primacy (1.14's normative war given theory's dress); (7) managerial-hegemony's pessimism (the board-as-legal-fiction's critique) — and the theories' synthesis: the governance as the agency's problem-solving under the fairness's constraint.