Corporate Governance and Investor Trust: Toward an Integrative Conceptual Framework

Abstract

In recent years, capital markets have experienced a loss of trust, partly due to corporate governance failures and accounting scandals. Although corporate governance aims to regulate relationships among stakeholders and reduce the risk of opportunistic behavior, its role in building and restoring investor trust remains insufficiently integrated from a theoretical perspective. The literature remains fragmented regarding the joint articulation of agency theory and stewardship theory in explaining this relationship. Therefore, this research addresses the following question: How can corporate governance contribute to building and strengthening investor trust through the combined perspectives of agency theory and stewardship theory? This paper proposes an integrative conceptual framework based on these two approaches. Following a review of the literature on trust and corporate governance, a theoretical model is developed around a balance between control mechanisms and trust-based mechanisms. The proposed contribution takes the form of a typology of governance levers structured around three dimensions: control and protection, alignment of interests, and trust and engagement. The proposed model considers that strengthening investor trust depends on the articulation of these mechanisms and that their balance may vary according to the institutional context, firm characteristics, and the specific risks faced by the firm.

JEL Classification: G30, G34

Paper type: Theoretical research – proposal of an integrative conceptual framework