S stocks worth 15 trillion more than half of all us

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Unformatted text preview: ership Theory of the Firm” (also called property of finance theory) Stakeholder theory argues the corporation serves a broader purpose, to create value for society. You have to take multiple views into account. Core arguments for stakeholder theory of the firm: - Descriptive - Instrumental - Normative A stake is an interest in – or claim on – a business enterprise Businesses are embedded in networks. Stakeholder /=/ Stockholder. Stockholders are one of several kinds of stakeholders. Market Stakeholders – those that engage in direct economic transactions with the company Nonmarket Stakeholders – those who don’t engage in direct economic exchange with the form but are affected by or can affect its actions Internal stakeholders are those, such as employees and managers, who are employed by the firm External stakeholders are those who – although they may have important transactions with the firms – are not directly employed by it. Stakeholder Analysis It is part of every manager’s job. Process whereby identify relevant stakeholder and analyze their interest and power. BUS 101 – Chapter 14 - Market or key stockholder is the owner - Government is not a stakeholder Stockholders can be an individual or an institution. They have financial objectives. Stockholders Trends: In 2010, institutions accounted for 63% of the value of all U.S stocks, worth $15 trillion More than half of all US households owned stocked Roles and Rights of Stockholders: Individuals and institutions buy stock to provide capital to companies Stockholder legal rights – return on your investment, liquidity of financial reports, voting for a board of directors, right to sell the stock, right to bring suit against company if we feel abuse is being done by officers or company Fiduciaries of the Owners Management is their representative in the day- to- day work of the company - Fiduciary Responsibility - Agency Problems - Perks - Shirking responsibilities - Acting in own best interest and not that of the owners - Board of Directors is responsible to monitor these issues Board of Directors They are in a key role - Fiduciary responsibility to the owners/stockholders - Elected by shareholders to positions with legal duty to establish corporate objectives and policies - Review management to maintain protection of stockholders’ interest Arguments FOR high exec pay: - High salaries incentivize better performance and risk taking - High salaries bring in the best and the brightest - Not many individuals are able to run such a large and complex company Arguments AGAINST high exec pay: - It hurts us with being competi...
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This document was uploaded on 02/22/2014 for the course BUS 101 at Miami University.

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