Shareholderism around the World: Corporate Purpose, Culture, and Law

We provide the first comprehensive analysis of directors’ shareholderism: their principled stance towards shareholders and stakeholders in forming strategy. We develop an analytical framework that links shareholderism to individual and institutional factors and test our theoretical predictions using a sample of more than 900 directors originating from 55 countries and serving in 23 countries. Directors’ shareholderism varies according to their individual values, their cultural heritage of egalitarianism, harmony and embeddedness, and their status as expatriate directors. Directors’ shareholderism does not appear to depend on the distinction between common and civil law. Instrumental variable regressions that address the endogeneity of directors’ expatriate status suggest that expatriates’ and local directors’ shareholderism reflect different cultural emphases. To be effective, current approaches to ensuring corporations do the “right” thing through legal injunctions may need to be mindful of the stability and resilience of individual values and culture.