The Relationship between Ethically Oriented Leadership, Stewardship, Corporate Governance and Firm Performance from a Management Perspective

Abstract

The relationship between the performance of large corporations and the most senior management actions is under researched. This presents a gap in the research, particularly in relation to management performance. Management performance encompasses not only output, for example, profit, but also maintenance of the value of assets for which they are responsible. Management is a complex function and requires the balancing of sometimes conflicting elements, such as leadership, stewardship, corporate governance and responsibility for economic advancement of the firm. Extant research tends to focus on examining only two or three of these elements together, such as corporate governance and financial performance. In many cases this produces mixed results, which suggests that something is missing or incorrectly measured. A holistic approach is used in this thesis to include the main components of management and firm performance. Each element of management is examined separately, including popular supporting theories and measurement methods, and then combined. The traditional approach of relying, sometimes exclusively, on statistical significance to identify important variables is contested. Numerical results without context are difficult, if not impossible, to explain. The interconnectedness of variables may also be overlooked. This thesis used some alternative approaches to overcome such omissions.
The aim of this thesis is to examine the actions of the most senior managers in large organisations in relation to leadership, stewardship, corporate governance and firm performance from a management perspective. The research objectives of the study are to identify from the largest PLC in the UK, the FTSE 100, from 2000 to 2016, examples of ethically oriented leadership; to develop a new measure of firm performance which can be used to analyse PLC published accounts to determine whether they have been managed from an organisational stewardship perspective; to empirically examine the association between ethically oriented leadership, stewardship, corporate governance and sustainable firm performance for the largest UK non-financial firms. In order to achieve the research objectives, the following research questions were examined; can ethically oriented leadership be measured? Can stewardship be measured using financial data from the published accounts of the largest PLC in the UK? Are ethically oriented leadership, stewardship, corporate governance and sustainable financial performance interdependent?
A new measure of stewardship was presented, which enabled the importance of stewardship to be assessed. Being able to measure an aspect of stewardship will allow further research into its true value. It was also suggested that a more holistic approach be taken in the evaluation of firm performance rather than a narrow focus on short-term results. This contributes to the research of the concept of financial sustainability of the firm rather than environmental sustainability.
The approach to stewardship taken in this thesis is original and without precedence at this time. It provides a quantitative measure which can broaden the scope of research into management performance.
A novel approach was taken in the evaluation of leadership, taking advantage of developments in artificial intelligence applications. A deep neural network model was used to classify a firm’s use of ethical and unethical leadership. This is a new direction for leadership research and contributes to this area of study.
The measures of financial performance used in this thesis focused on operational management decision-making rather than broad traditional measures commonly used by researchers.
The relationship between the main elements of management and firm performance was assessed using linear regression and an association between leadership, stewardship, corporate governance and firm performance was found.
Stewardship showed a negative relationship with profitability. This was not viewed as deleterious, as it could contribute to overall financial success, as shown with a relevant example. This is much the same as investments in productive capacity, giving rise to a short-term cost for a long-term gain.
The main limitations of the thesis are the widespread use of the indirect method of cash flow reporting which may obviate the accurate measurement of actual cash flows. Also, the effect of the sample choice on the generalisability of the results. This presents an opportunity for further research.

Date of Award	18 Feb 2026
Original language	English
Awarding Institution	University of Portsmouth
Supervisor	James McCalman (Supervisor) & Khaled Hussainey (Supervisor)