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.