The First And Most Significant Difference Between The Shareholder Theory And Stakeholder Theory I …
When I say “stakeholder theory” I am talking about a group of people with differing interests within a corporation. The shareholder theory is founded on the belief that the board of directors represents the interests of the corporation.
This belief, that the board of directors is the entity that will make the best decision regarding difference between shareholder and stakeholder the future of the company, is what drives the financial statement. But this information is just for the board of directors.
I’m assuming that you are reading this because you are interested in changing the shareholder theory to a stakeholder theory. With the right person at the helm of the board of directors, the view from the auditor is going to be the right view.
If the board is not doing their job and they are not looking out for the needs of the shareholders, then they should be replaced. They should be replaced with someone who is better suited to protect your interests. But it’s not going to happen.
The employees will never trust the board and the investors will also never trust the board long term. And as far as the board of directors is concerned, the shareholders, shareholders always get what they want.
Since the time shareholder theory has been adopted as a common practice, it’s been consistently difficult to change. The problem is, that the shareholders only want what they want. It’s easy to align with the shareholders and they are not always right.
It’s not a difficult task to figure out how to do what you want. But if you don’t really care about your shareholders, your
stockholders
, you’ll go along with whatever they want. What you want is the shareholders.
In summary, the shareholder theory is just the kind of theory that fails to recognize that there are many different kinds of people involved. There are all kinds of variations. And those who want to get ahead within a corporation always think in terms of the shareholders