Developing trust through stewardship: Implications for intellectual capital, integrated reporting, and the EU Directive 2014/95/EU

John Dumay*, Matteo La Torre, Federica Farneti

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

65 Citations (Scopus)


Purpose: This paper examines the gap between reporting and managers’ behaviour to challenge the current theoretical underpinnings of intellectual capital (IC) disclosure practice and research. The authors explore how the key features from IC and integrated reporting can be combined to develop an extended model for companies to comply with EU Directive 2014/95/EU and increase trust in corporate disclosures and reports. 

Design/methodology/approach: This essay relies on academic literature and examples from practice to critique the theories that explain corporate disclosure and reporting but do not change management behaviour. Based on this critique, the authors argue for a change in the fundamental theories of stewardship to frame a new concept for corporate disclosure incorporating using a multi-capitals framework.

Findings: We argue that, while the inconsistency between organisations’ reporting and behaviour persists, increasing, renewing or extending the information disclosed is not enough to instil trust in corporations. Stewardship over a company’s resources is necessary for increasing trust. The unanticipated consequences of dishonest behaviour by managers and shareholders compels a new application of stewardship theory that works as an overarching guide for managerial behaviour and disclosure. Emanating from this new model is a realisation that managers must abandon agency theory in practice, and specifically the bonus contract.

Research limitations/implications: We call for future empirical research to explore the role of stewardship theory within the dynamics of corporate disclosure using the approach. The research implications of those studies should incorporate the potential impacts on management behaviours within a stewardship framework and how those actions, and their outcomes, are disclosed for rebuilding public trust in business.

Practical implications: The implications for integrated reporting and reports complying with the new EU Directive are profound. Both instruments rely on agency theory to coax managers into reducing information asymmetry by disclosing more. However, agency theory only re-affirms the power managers have over corporate information. It does not change their behaviour, nor to act in the interest of all stakeholders as the stewards of an organisation’s resources.

Social implications: We advocate that, in business education, greater emphasis is needed on how stewardship has a more positive impact on management behaviour than agency, legitimacy and stakeholder theories.

Originality/value: We reflect on the current and compelling issues permeating the international landscape of corporate reporting and disclosure and explain why current theories which explain corporate disclosures do not change behaviour or engender trust in business and offer an alternative disclosure model based on stewardship theory.

Original languageEnglish
Pages (from-to)11-39
Number of pages29
JournalJournal of Intellectual Capital
Issue number1
Early online date2018
Publication statusPublished - 14 Feb 2019


  • Agency theory
  • Corporate disclosure
  • EU Directive 2014/94/EU
  • Integrated reporting
  • Intellectual capital
  • Stewardship theory


Dive into the research topics of 'Developing trust through stewardship: Implications for intellectual capital, integrated reporting, and the EU Directive 2014/95/EU'. Together they form a unique fingerprint.

Cite this