We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

The contemporary perception of shareholder theory: a discouse on the shareholder-stakeholder debate - Essay Example

Comments (0) Cite this document
The Contemporary Perception of Shareholder Theory: A Discourse on the Shareholder-Stakeholder Debate Essay Name Name of Professor Introduction The main objective of organisations or management to maximise shareholder wealth has been strongly challenged recently…
Download full paperFile format: .doc, available for editing
Polish This Essay96.3% of users find it useful
The contemporary perception of shareholder theory: a discouse on the shareholder-stakeholder debate
Read TextPreview

Extract of sample
"The contemporary perception of shareholder theory: a discouse on the shareholder-stakeholder debate"

Download file to see previous pages These shareholders look forward to the maximisation of their investment (Husted & de Jesus 2006, p. 77). A management who is unable to increase shareholder wealth are disobeying and disregarding this expectation. This essay tries to prove that prioritising shareholder wealth or profitability to the detriment of other stakeholders (e.g. employees, communities, and the environment) is no longer a principle most people embrace. The Shareholder-Stakeholder Debate Financial economists usually place more importance on shareholder wealth and interests than those of the other stakeholders. For these financial economists the main obligation of the management is to maximize the wealth or investment value of shareholders. The widely quoted statement from Milton Friedman presents the central idea: “There is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long as it... engages in open and free competition, without deception or fraud” (Shaw 2010, p. 177). One of the determined supporters of Friedman’s shareholder theory is Michael Jensen, a financial economist. He argued that maximisation of shareholder wealth does not imply that organisations should totally disregard other stakeholders (Freeman, Harrison, Wicks et al. 2010, p. ...
A shareholder-driven company doesn’t ignore its stakeholders. What it does is invest resources to benefit each of these constituencies to a point where the additional benefits to the company... exceed the additional cost. But at the same time Jensen opposes the practice of giving the management the power to decide whether to distribute resources so as to please or assure a wide array of stakeholders. His warning is based on distrust of management and its tendency to distribute resources in line with their personal motives and interests to the detriment of productivity. In addition, Jensen claims that shareholders must be prioritised in managerial operations for they “are the only constituency of the corporation with a long-term interest in its survival” (Freeman et al. 2010, p. 128). However, this point is flawed because shareholders have the freedom to sell their stock whenever they want to. On the contrary, employees do not have an easy way out, and, without a doubt, local communities are negatively affected if a company collapses; moreover, as clearly stated by Cloninger, “In the presence of asymmetric information, the avid pursuit of share price maximisation may lead managers to violate certain stakeholder interests and employ business practices that are unethical, immoral, or illegal” (Freeman et al. 2010, p. 129). Milton Friedman has been severely criticised by supporters of corporate social responsibility (CSR) because of his assumption that the sole responsibility of an organisation to society was to increase shareholder value. He argues that any efforts by organisations to use resources for humanitarian purposes, or try to meet the demands of stakeholders aside from shareholders were mostly unwise. Yet, it is ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
(“The contemporary perception of shareholder theory: a discouse on the Essay”, n.d.)
The contemporary perception of shareholder theory: a discouse on the Essay. Retrieved from https://studentshare.org/management/1401023-acadamic-essay-should-the-primary-objective-of
(The Contemporary Perception of Shareholder Theory: A Discouse on the Essay)
The Contemporary Perception of Shareholder Theory: A Discouse on the Essay. https://studentshare.org/management/1401023-acadamic-essay-should-the-primary-objective-of.
“The Contemporary Perception of Shareholder Theory: A Discouse on the Essay”, n.d. https://studentshare.org/management/1401023-acadamic-essay-should-the-primary-objective-of.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document
Essay on Shareholder Value
A dividend payment is that payment that is usually declared by the board of directors of a company and which is granted to the shareholders of that company. It forms part of a given periods retained earnings. Most of dividends are paid out in cash form, sometimes as stock or even property.
7 Pages(1750 words)Essay
Corporate Governance (Shareholder and Stakeholder Capitalism)
Such organisations are also believed to possess a higher degree of worth with regard to their businesses in comparison to the social orders that are based on shareholders. In few situations, it was observed that organisations were more inclined and eager for being stakeholder-oriented for the reason of augmenting the worth of the respective organisations.
4 Pages(1000 words)Essay
Enlightened Shareholder Value
Enlightened Shareholder Value Introduction Enlightened shareholder value is an important aspect of English Company Act 2006.The determination of the goals of a big traded company brings to fore two main concepts that are applicable in various commonwealth jurisdictions: the ides of the value of the shareholders, and the value for the stakeholders.
9 Pages(2250 words)Essay
Enhancing Shareholder Value
Many schools of thought have taken conflicting views on this issue. The " dividend irrelevance" group of thought will reveal that dividends have nothing to do with firm value because there is no tax disadvantage to an investor to receiving dividends, and that firms can raise funds in capital markets for new investments without having to go through high issuance costs.
7 Pages(1750 words)Essay
Shareholder Wealth Maximisation Essay
The last word 'wealth' according to the dictionary means any resource that has some value in terms of utilization and trade. If the whole axiom is to be translated it would be 'to gain the highest achievable value for the owners of the company. Therefore in order to achieve this axiom, managers especially finance managers take decisions that are in accordance with this statement.
6 Pages(1500 words)Essay
Shareholder Wealth Maximisation
However, in the recent times, this concept has precariously affected the economies and raised doubts on the appropriate Corporate Governance practices and Corporate Social Responsibility (CSR) (Smith L.M., n.d). Corporate Governance is the system of governing a business corporation, its functions and functionaries, creating sustainable shareholder value and safeguarding the stakeholder's interest.
10 Pages(2500 words)Essay
Shareholder Value
The owners of the business are called shareholders because they hold shares of ownership and "share" in the business' profits. Shareholders hire managers who run the business and who, as part of their jobs, make strategic and tactical marketing decisions.
8 Pages(2000 words)Essay
Shareholder Theory and Kants Duty of Beneficence
In effect, it includes effectively all forms of action intended for the betterment of other persons (Mansell, 2012). The article seeks to show that a corporation has direct responsibilities to stakeholders such as employees, suppliers, customers and
1 Pages(250 words)Essay
Self-interest and Ethics, Stakeholder/shareholder theory
27). However, it is often difficult to define what comes under ethical conduct. The question whether business self-interest takes into account the common good is equally significant. It has been argued that business self-interest is often motivated by
7 Pages(1750 words)Essay
Agency theory and the question of shareholder primacy
It is based on this fundamental principle that ownership and control are created within the same corporate firm. Unfortunately, Stout saw a situation where the distinctive relationship between ownership and control under the modern
9 Pages(2250 words)Essay
Let us find you another Essay on topic The contemporary perception of shareholder theory: a discouse on the shareholder-stakeholder debate for FREE!
Contact us:
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us