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Deviations from Expected Stakeholder Management, Firm Value, and Corporate Governance


  • Bradley W. Benson,

    1. Bradley W. Benson is an Assistant Professor in the Department of Economics and Finance at Louisiana Tech University, Ruston, LA.
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  • Wallace N. Davidson III,

    1. Wallace N. Davidson III is the Henry Rehn Research Professor in the Finance Department at Southern Illinois University, Carbondale, IL.
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  • Hongxia Wang,

    1. Hongxia Wang is an Assistant Professor in the Institute for Contemporary Financial Studies in the College of Business and Economics at Ashland University, Ashland, OH.
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  • Dan L. Worrell

    1. Dan L. Worrell is Dean and the Sam Walton Leadership Chair in the Sam Walton College of Business at the University of Arkansas, Fayetteville, AR.
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  • The authors would like to thank William Christie (Editor), an anonymous referee, and seminar participants at the University of Mississippi for many helpful and insightful comments. All errors remain the responsibility of the authors.


We propose that high-quality corporate governance may mitigate agency costs related to value-destroying investments in stakeholder management (SM). Using an unbalanced panel of 9,051 firm-year observations for 1,631 firms, we find that deviations from expected stakeholder management (ESM) are increasing in chief executive officer (CEO) portfolio delta. We find, however, that deviations from ESM are negatively related to proxies for effective board monitoring. We also document that the effect of governance mechanisms varies by industry (consumer or industrial orientation) and SM dimension. The results indicate that corporations with good governance pursue shareholder value maximization while constraining unnecessary investment in stakeholders.

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