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Trust, Risk, and Shareholder Decision Making: An Investor Perspective on Corporate Governance

Published online by Cambridge University Press:  23 January 2015

Lori Verstegen Ryan  and
Ann K. Buchholtz
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Abstract:

Shareholders’ relationship to the firm is a central theme in corporate governance, yet the investors’ perspective has been virtually ignored in governance research. This paper attempts to explain the previously unexplored role of trust in the investor decision-making process. The proposed model suggests that trust acts as the antecedent of the risk variable in existing investor decision-making models. Stock ownership involves both financial and ethical risk, which by definition requires some level of implicit trust in management and the market.

Type
Corporate Governance
Information
Business Ethics Quarterly , Volume 11 , Issue 1 , January 2001 , pp. 177 - 193
Copyright
Copyright © Society for Business Ethics 2001

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