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

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  • Ryan, Lori Verstegen
  • Buchholtz, Ann K.

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.

Suggested Citation

  • Ryan, Lori Verstegen & Buchholtz, Ann K., 2001. "Trust, Risk, and Shareholder Decision Making: An Investor Perspective on Corporate Governance," Business Ethics Quarterly, Cambridge University Press, vol. 11(1), pages 177-193, January.
    • Handle: RePEc:cup:buetqu:v:11:y:2001:i:01:p:177-193_00
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    Citations

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    Cited by:

    1. Jonathan A. Batten & Igor LonČarski & Peter G. Szilagyi, 2022. "Financial Market Manipulation, Whistleblowing, and the Common Good: Evidence from the LIBOR Scandal," Abacus, Accounting Foundation, University of Sydney, vol. 58(1), pages 1-23, March.
    2. Lori Verstegen Ryan, 2006. "Foundation and Form of the Field of Business Ethics," Journal of Private Enterprise, The Association of Private Enterprise Education, vol. 22(Spring 20), pages 34-49.
    3. Omotuyole Isiaka Ambali & Toritseju Begho, 2021. "Examining the relationship between farmers' perceived trust and investment preferences," Journal of International Development, John Wiley & Sons, Ltd., vol. 33(8), pages 1290-1303, November.
    4. Vohra, Shalini & Davies, Gary, 2020. "Investor regret, share performance and the role of corporate agreeableness," Journal of Business Research, Elsevier, vol. 110(C), pages 306-315.
    5. Livia Levine, 2019. "Digital Trust and Cooperation with an Integrative Digital Social Contract," Journal of Business Ethics, Springer, vol. 160(2), pages 393-407, December.
    6. Erik Rietschoten & Koen Bommel, 2023. "A Critique of Utilitarian Trust: The Case of the Dutch Insurance Sector," Journal of Business Ethics, Springer, vol. 183(4), pages 1011-1028, April.
    7. Abdelsalam, Omneya & Chantziaras, Antonios & Joseph, Nathan Lael & Tsileponis, Nikolaos, 2024. "Trust matters: A global perspective on the influence of trust on bank market risk," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 92(C).
    8. Anass YACHOULTI & Abdellah HOUSSAINI, 2018. "impact of supply chain integration on corporate financial performance," Journal of Academic Finance, RED research unit, university of Gabes, Tunisia, vol. 9(1), pages 78-90, June.
    9. Anass YACHOULTI & Abdellah HOUSSAINI, 2018. "The impact of supply chain integration on corporate financial performance," Journal of Academic Finance, RED research unit, university of Gabes, Tunisia, vol. 9(1), pages 78-90, June.
    10. Clark-Murphy, Marilyn & Soutar, Geoffrey N., 2004. "What individual investors value: Some Australian evidence," Journal of Economic Psychology, Elsevier, vol. 25(4), pages 539-555, August.

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