pros and cons of shareholder theory

It does not actively run the businesses that it owns, it simply owns other companies. Pros and cons of ranking shareholders over employees and - StudyMode If managers can satisfy shareholders expectation they will maintain their support and they will also increase shareholder value. [10]Many economists do not find statistically significant difference between the earnings of socially responsible funds compared to more traditional funds. By having this erratic notion, they arent accepting to new experiences as they dont allow others to criticize them nor provide them with feedback which could actually be beneficial. The concept of shareholder value theory, also known as "shareholder primacy theory" or "shareholder wealth maximization" has been pervasive and determined as the aim of large public corporations, certainly as prominence since 1970s. Many argue that a business has much more responsibility than just focusing on the increase of profits. Smart business owners approach potentially antagonistic stakeholders before a problem starts, and then they build a relationship to take a disadvantage and make it an advantage. According to this theory, the primary responsibility of a company's management is to maximize shareholder value by increasing the value of the company's stock. Even if you do, you will not have the ability to evoke major changes without the approval of the new owners. Instead of corporate social responsibility (CSR), Dahlsrud (2008) visualize as social construction (SC) because of infinite analogues. SASB's standards are designed to be "used in core communications to investors" but it requests companies to "assess the pros and cons" of each channel, taking into consideration input received from shareholders and consultation with auditors. The philosophy of the shareholder approach attempts to increase the organizations value by enhancing firms earnings, by increasing the market value of corporations shares and by increasing also the frequency or amount of dividend paid[1]. PDF Achieving clarity in decision-making Technical Report Gibson (2000) also supports that it is not adequate for all stakeholders to be given an equal benefit because if stakeholders (other than the shareholders) are given power of influence over the business it is not fair that shareholders are not given, in return, power of influence over societys communities and initiatives., Though not an ideal model of strategy in many ways, largely in part on ignoring the human value aspect, rational strategy is still sought after in many cases because it can be measured and calculated precisely after considering all available angles and avenues, making it easier and less costly to follow compared to dynamic strategy. The stakeholder theory makes it clear that directors have a responsibility to shareholders and stakeholders alike. There are times in which stakeholders are focused on their own interests. Pros And Cons Of The Enlightened Stakeholder Debate

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