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 of personal values in directors’ discretion. We present evidence on the way personal and institutional factors could 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 around the world hold a principled, quasi-ideological stance towards shareholders and stakeholders, called shareholderism. We theorize and find that in addition to personal values, directors’ shareholderism level associates with cultural norms that are consistent with entrepreneurship. Among legal factors, only creditor protection exhibits a negative correlation with shareholderism, while general legal origin and proxies for shareholder and employee protection are unrelated to it.