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A constituency statute is a term in US corporate law for a rule that requires a board of directors to pay regard to the interests of all corporate stakeholders in their decision making. A constituency statute is intended to give directors of corporations the discretion to balance the interests of stakeholders, rather than have to solely focus ...
The definition of corporate responsibilities through a classification of stakeholders to consider has been criticized as creating a false dichotomy between the "shareholder model" and the "stakeholder model", [2] or a false analogy of the obligations towards shareholders and other interested parties. [3]
Clients are the base of any strategy according to Ohmae. Therefore, the primary goal is supposed to be the interest of the customer and not those of the shareholders for example. In the long run, a company that is genuinely interested in its customers will be interesting for its investors and take care of their interests automatically.
All shareholders are stakeholders, but not all stakeholders are shareholders.
Corporate transparency describes the extent to which a corporation's actions are observable by outsiders. This is a consequence of regulation, local norms, and the set of information, privacy, and business policies concerning corporate decision-making and operations openness to employees, stakeholders, shareholders and the general public.
The concept of TBL demands that a company's responsibility lies with stakeholders rather than shareholders. In this case, "stakeholders" refers to anyone who is influenced, either directly or indirectly, by the actions of the firm. Examples of stakeholders include employees, customers, suppliers, local residents, government agencies, and creditors.
Dodge v. Ford Motor Co., 204 Mich 459; 170 NW 668 (1919), [1] is a case in which the Michigan Supreme Court held that Henry Ford had to operate the Ford Motor Company in the interests of its shareholders, rather than in a manner for the benefit of his employees or customers.
Similarly, the directors and shareholders face the principal-agent problem, where the directors may fail to properly represent the interests of the shareholders and may be in violation of their legal fiduciary obligations. Passive shareholders may disengage from the shareholder democracy model, a phenomenon known as shareholder apathy.