Quo Vadis? Suggestions for future corporate governance research

In this paper I first review the basic tenets of agency theory and theory of managerial capitalism as well as some of the major research in these areas then suggest for areas for future research that go beyond the extant empirical work. First, I suggest that it would be useful to reconsider the basic nature of the agency relationship, taking into account that while equity holders can be considered the principal, the board of directors may be more realistically in need of agent-like controls. Second, the complementary or supplementary nature of the monitoring/incentive alignment relationship has been shown theoretically but the empirical evidence is equivocal and needs future investigation. Third, there has been very limited research on the construct validity of archival measures of the sort used in agency theory. This requires the use of methodologies outside those of the more conventional type used in agency theory (i.e., from economics and finance). Finally, agency theory development would profit greatly by more extensive use of research methods such as laboratory studies and survey methodology and the integration of concepts such as personality and control processes.