Financial strategy as a mode of governance and corporate value : a proposed theoretical research model

Abstract

The financial strategy is the financial declination of the company's strategy. Its ultimate objective is to create value which is always of controversial debate on the sharing between "agent" and "principal" as the agency theory explains. The objective of this paper is to justify how the conflicting situation of value can be at the origin of a governance system in need of strengthening, from where the financial strategy can present a better solution by seeking to align the interests of stakeholders on a long-term time horizon. Based on the surveys conducted by BCG (2017) and McKinsey (2021), the results show that through the positive impact of the financial strategy prioritized and/or focused on shareholder and stakeholders' performance, respectively, the interests of stakeholders can be aligned in the long run. They allow us to propose a theoretical model dealing with the relationship between financial strategy and value, by broadening the framework of analysis of corporate governance and by mobilizing 4 hypotheses: H0, H1, H2, H3.