Asked by David Williams on May 22, 2024
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Shareholder theory addresses the firm's purpose and the firm's obligations to its stakeholders.
Shareholder Theory
The theory that a corporation primarily has a duty to maximize shareholder value and profit, as advocated by Milton Friedman.
Firm's Purpose
A firm's purpose is its core reason for existence, encompassing its mission, values, and goals, which guides its strategies and operations.
Stakeholders
Individuals or groups that have an interest in the performance and activities of a company, including employees, customers, suppliers, and investors.
- Comprehend the significance of taking into account the perspectives of various stakeholders in formulating business strategy.
- Acknowledge the obligation of companies to maximize financial gains while also benefiting societal welfare.
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Learning Objectives
- Comprehend the significance of taking into account the perspectives of various stakeholders in formulating business strategy.
- Acknowledge the obligation of companies to maximize financial gains while also benefiting societal welfare.
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