Why shareholders need to be good stewards

Shareholders are collectively responsible for driving business and must learn to be good stewards

Speaking at an NSE event a few years ago, Marco Brecht, then professor of finance at the Université libre de Bruxelles, highlighted that regulatory attitudes towards obtaining the right balance between managerial discretion and shareholder interests vary widely across the world. This is despite having broadly similar governance frameworks.

At the core of this balancing act is the age-old principal-agent problem. It arises since there often is a conflict in priorities between the owner of an asset (shareholder) and the person to whom control of the asset (management) has been delegated. Professor Brecht went on to illustrate how different jurisdictions