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To What Extent Does a Company Exist Only For The Benefit Of Its Shareholders - Essay Example

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The discussion seeks to answer the question: To what extent does a company exist only for the benefit of its shareholders. This research discusses the place of agency theory and its alternatives, including the problems of putting these theories into practice…
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To What Extent Does a Company Exist Only For The Benefit Of Its Shareholders
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Download file to see previous pages This research will begin with the statement that the Occupy protests taking place around the world have highlighted a problem that lies at the heart of corporate structures: the single-minded pursuit of profit at the expense of everything else. Indeed, the logic of the market demands that players in it pursue maximum gain. A company, therefore, is expected to pursue maximum profits for its shareholders. Wealth generation becomes a single and overarching focus.  Experience has shown us however that this has sometimes led to unfortunate consequences. The single-mindedness with which profit is pursued has allowed companies to neglect other issues and concerns. It became of little surprise therefore that the recession that has hit much of Europe and America and the widely-reported corporate scandals have highlighted the need to make corporate governance at the top of a company’s order of priorities and the overriding principle guiding its directors. The escalating protests on Wall Street in the United States, for example, demonstrate growing public outrage against corporate greed and white-collared crimes.  In simple terms, this paper suggests that the company must exist only for the benefit of its shareholders only to the extent that it does not encourage corporate deviance and it retains its obligations to the rest of the society, not necessarily only its shareholders. This paper will begin by first discussing the Agency theory and its implications. Next, it will discuss the theory counterpoised to that, which is the Stakeholder theory – highlighting corners and turns of the debate that theoretically underpins the question as to whether and to what extent a company should exist only for the benefit of the shareholders. ...Download file to see next pagesRead More
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