Managerial Ownership and Firm Performance: The Cultural Boundaries of Agency Theory

Agency theory is a cornerstone of corporate governance in both theory and practice. It states that the interests of the agent and principal are naturally misaligned, and predicts that awarding the agent with ownership solves the subsequent agency problem. However, empirical evidence on agency theory so far failed to support the offered solution, leading critics to question agency theory’s validity. Drawing on a worldwide sample of 27,852 listed...