New research from the Rock Center for Corporate Governance at Stanford University and the Diligent Institute finds that corporate directors are not as shareholder-centric as commonly believed and that companies do not put the needs of shareholders significantly above the needs of their employees or society at large. Instead, directors pay considerable attention to important stakeholders — particularly their workforce — and take the interests of these groups into account as part of their long-term business planning. While directors are largely satisfied with their ESG-related efforts, they do not believe the outside world understands or appreciates the work they do. Directors recognize that tensions exist between shareholder and stakeholder interests. That said, most believe their companies successfully balance this tension. In general, directors reject the view that their companies have a short-term investment horizon in running their businesses. In the summer of 2019, the Diligent Institute and the Rock Center for Corporate Governance at Stanford University surveyed nearly 200 directors of public and private corporations globally to better understand how they balance shareholder and stakeholder needs.
David F. Larcker, Brian Tayan, Dottie Schindlinger, and Anne Kors. Further inquiries about reproduction and use should be directed to the Corporate Governance Research Initiative.
