Red Flag: Scepticism as Chinese CEOs Get Billion-Dollar Bonuses

Running head: ACCOUNTING THEORY AND PRACTISE
Accounting theory and practise
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Total word count :735

ACCOUNTING THEORY AND PRACTISE
Article 4- ‘Red flag’: Scepticism as Chinese CEOs get billion-dollar
bonuses
The article aims to focus on the bonuses related to how the Initial Public Offerings
should be related to the performance metrics. The article also states about the startups of
China and how the chief executing officer of the startups are provided with bonuses. It states
that the idea of the initial public offering have more justification along with helping the
founders to get rich (Forbes.com. 2018). The bonuses that are related to IPO in order to bilk
up the share of the founder. The article therefore states how the theory of stakeholder are to
be applied when bonus are been provided to the CEOs of the start-ups of China.
Stakeholder theory
The stakeholder theory suggests that the purpose of the business is to create value as
much as possible for the stakeholders. Therefore, to succeed, the executives must keep the
interests of customers, employees, communities and shareholders aligned. The managerial
branch of the stakeholder theory aims to explain that the power of the stakeholders in order to
affect the management should be related to the stakeholders control over resources that is
needed by the firm. Under this particular branch it is expected that the firm will meet the
information demand of some particular stakeholder groups (Antonelli, D'Alessio & Cuomo,
2017 p. 287). The stakeholder theory can be both ethical as well as managerial in nature. The
theory which relates to the ethics of business and the organizational management which
addresses morals and values in order to manage an organization is termed as stakeholder
theory. When the stakeholder group is not considered to be that powerful at that time their
demand for information might be ignored. Organizations are often provided incentives in
order to reveal information about the different kinds of program and the initiatives. The
strategy of the stakeholder view integrates both views based on resource as well as market.
One of the most common version of the theory of stakeholder is to define the specific
stakeholders of a company. The stakeholders are selected by startups in an interactive
approach. There is a presence of bits of opportunistic decisions and outcomes that is related
to the selection of stakeholders.