Towards a Psychology of Corporate Governance: Theoretical Insights on Non-Executive Director and CEO Performance

Generally, corporate governance research has been considered the preserve of economics, accounting, and finance scholars. However, attempts are being made to apply behavioral science knowledge in this domain that has traditionally been considered economics and finance. The purpose of this article is to further the efforts in establishing a tradition of behavioral science research in corporate governance. To accomplish this objective, the article establishes the gaps in the extant literature on corporate governance. The article argues from theoretical insights emanating from organizational psychology in particular and behavioral sciences in general. As a result, this article attempts to apply some of the existing theories in social and organizational psychology to explain factors influencing the performance of non-executive directors on boards as well as executive performance and remuneration. Principally, we utilized theories of motivation (expectancy and equity theories) and social influence theory (conformity) to highlight the potential contributions that the psychology of corporate governance can make to advance knowledge and practice. Further, applications and practical ways of testing derived assumptions are also discussed.