Boards of Directors: comparative essay on the perspectives of Agency Theory and Stewardship Theory

Corporate governance has become a widely studied and analyzed topic in both academic and corporate spheres. Factors such as organizational growth and development, capital dispersion, and various accounting scandals have made discussions on best management practices essential within the organizational context. Thus, boards of directors have become the focal point of efforts to improve governance, as they possess greater flexibility and autonomy than external controls in monitoring and adjusting corporate behavior. Considering the importance of boards in the development and enhancement of governance, this essay aims to describe, analyze and compare two of the main theories that support the theme: agency theory, which represents the mainstream theoretical framework, and stewardship theory, which presents assumptions contrary to the former, offering a new perspective on governance. Regarding Agency Theory, the literature suggests that a board with a smaller number of directors, a substantial proportion of external members, and without duality of roles between the company's CEO and board chair contributes to minimizing agency conflicts and costs. In contrast, Stewardship Theory is generally understood as presenting an alternative view, challenging Agency Theory by introducing a new model of the 'man' or 'agent,' one who considers not only personal objectives but prioritizes, above all, the organization's welfare.