THEORIES OF CORPORATE GOVERNANCE

BY BHAVESH KUMAR

There are four broad theories to explain corporate governance :y Agency theory. y Stewardship theory. y Stakeholder theory. y Sociological theory.

Agency theory
y Who are agents and principals? y What do mean by agency problem? y What is agency cost and agency loss? y Problems with the agency theory. y Methods to reduce agency costs.

Stewardship theory
y What do mean by stewardship? y Basic principle of stewardship theory. y Criticisms of stewardship theory. y Differences between agency theory and stewardship theory.

Stakeholder theory
y Shareholder versus stakeholder approaches. y Basic principle of stakeholder theory. y Criticisms of the stakeholder theory.

Sociological theory

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