Shareholder’s Assessment

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propagates the interests of the shareholders based on the argument that they are the owners of the company thus their property rights ought to be protected. Therefore, the directors must run the company in the interest of the shareholders.Basis of determining business relationships: As per the shareholder’s theory, corporate relationships are determined by legal or implied contracts. Thus, it recognizes accountability towards those parties with whom an explicit legal agreement has been entered into. This vastly limits the scope of accountability.On the other hand the stakeholders’ school of thoughtThe escalation in the value of shareholding: the shareholder’s theory endorses the objective of generating higher returns to the investment of the shareholders. Whereas the stakeholders’ take is that, the corporation should strive to yield higher social returns to all the parties involved with it.The objective of wealth creation: escalation in the value of shareholding will result in greater wealth creation. therefore, it is consistent with the traditional corporate objective of profit maximization. The proponents of the shareholder’s theory maintain this. However, the other view is that when the interest of the stakeholders is taken into consideration then there shall be fairer distribution in addition to wealth creation, which will promote the general welfare of society.The Tinged Shareholder’s theory contains a reconciliation of the main ideas of the two schools of thought. It makes allowance for moral and social obligations and at the same time retains the director’s fiduciary duties and holds them responsible to the shareholders. The conflicting grounds of the normative and instrumental approaches are blurred in this theory. The traditional profit-maximizing objective of the shareholder’s theory is maintained while incorporating the corporate social responsibilities as well, therefore it is consistent with moral duty.c) I find the stakeholder’s theory rather convincing.