Importance of Shareholders in Corporate Governance

Running head: CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
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1CORPORATE GOVERNANCE
Table of Contents
Introduction:........................................................................................................................2
Discussion:...........................................................................................................................3
Difference between the stakeholders and the shareholders.............................................3
Recommendation how the board can take better decisions:............................................6
Conclusion:..........................................................................................................................8
References:..........................................................................................................................9

2CORPORATE GOVERNANCE
Introduction:
The aim of this assignment is to analyse the differences between the shareholders and the
stakeholders. The assignment will also discuss why the shareholders are much more important
than all other stakeholders. A business organization has a number of different stakeholders, who
affect the business operation in some particular way, but the most important one is the
shareholders who invests money in the organization and from whom the management works
smoothly. There are number of research and debate have been done why the shareholder are
much more important in the organization than all other existing stakeholders. This assignment
will provide a detailed discussion on the topic. The assignment will also provide some of the
recommendation about how they can improve the board decision making by making them
responsive to the diverse company stakeholders. The assignment will help to understand why the
shareholders have better control on the business organization that they are investing in than all
other stakeholders of the company.

3CORPORATE GOVERNANCE
Discussion:
To understand the key difference between the stakeholders and the shareholders the
understanding of the stakeholders and the shareholders is necessary.
Stakeholders are an accountant, organization, group, system or member who affects or
can be affected by organization’s actions (Lawrence and Weber 2014). The shareholder can be
highly affected by the policy and the objectives that are set by the organization. Some of the key
stakeholders of the company are government, directors, creditors, suppliers, employees,
shareholders, community and the union from where the business organization draws all the
resources. Stakeholders are of two type’s internal stakeholders and the external stakeholders
(Zhu, Sarkis and Lai 2013). Owners, employees, managers and the trade unions are the internal
stakeholders of the company and the suppliers, creditors, customers, government, competitors
and the society are the external stakeholders of the company.
Shareholder also known as the stockholder of the company is a person, company or an
institution who holds atleast one or more share of the company’s stock. The shareholders can
also be termed as the owner of the company who reaps the benefits of the organization’s success
during the increased values in the stock. However, when the organization is doing poor in the
industry the shareholders are highly affected, the shareholders can lose their money. The
shareholders are the most important stakeholder in the organization as they invest money and
without monetary investment the organization will have no operation in the industry.