Podcast
Questions and Answers
What is the main distinction between a stakeholder and a shareholder?
What is the main distinction between a stakeholder and a shareholder?
- A stakeholder is involved in day-to-day management, while a shareholder focuses on investment returns.
- A stakeholder has an interest in a business, while a shareholder owns shares in a business. (correct)
- A stakeholder is a board member, while a shareholder is an investor.
- A stakeholder receives dividends, while a shareholder influences management decisions.
What do shareholders usually seek to earn from their investment in a large company?
What do shareholders usually seek to earn from their investment in a large company?
- Control over the board of directors
- Direct involvement in day-to-day management
- Dividends and a higher share price (correct)
- Guaranteed profit regardless of business performance
When might shareholders become more closely involved in the company's decisions?
When might shareholders become more closely involved in the company's decisions?
- When they feel that their interests are threatened (correct)
- When they want to take over the company
- When the board of directors is performing well
- When the company is making high profits
What might shareholders express concerns about?
What might shareholders express concerns about?
In what situation might shareholders try to influence the decisions of the directors?
In what situation might shareholders try to influence the decisions of the directors?
Who can major shareholders discuss their concerns with?
Who can major shareholders discuss their concerns with?
Who might have enough shares in a company to control the composition of the board and the decisions made by the directors?
Who might have enough shares in a company to control the composition of the board and the decisions made by the directors?
In which industries might employees have a health and safety interest?
In which industries might employees have a health and safety interest?
What is one of the most important stakeholders of a business that can significantly affect its performance?
What is one of the most important stakeholders of a business that can significantly affect its performance?
What do companies invest a great deal of time and commitment on in order to retain good quality human resources?
What do companies invest a great deal of time and commitment on in order to retain good quality human resources?
Who earns an income to support themselves and may have a health and safety interest depending on the nature of the business?
Who earns an income to support themselves and may have a health and safety interest depending on the nature of the business?
What do employees make decisions about after careful thought as they are directly affected by it?
What do employees make decisions about after careful thought as they are directly affected by it?
What might differ between the majority shareholder and the minority shareholders?
What might differ between the majority shareholder and the minority shareholders?
Study Notes
Stakeholders and Shareholders
- A key distinction between stakeholders and shareholders is that stakeholders have an interest in the company's performance, while shareholders have a financial investment in the company.
Shareholders
- Shareholders usually seek to earn a financial return on their investment in a large company.
- Shareholders may become more closely involved in the company's decisions when they are unhappy with its performance or direction.
- Shareholders may express concerns about the company's financial performance, leadership, or strategic direction.
- Shareholders may try to influence the decisions of the directors during the annual general meeting (AGM) or through private discussions with the board.
- Major shareholders can discuss their concerns with the board of directors or executive management.
- A major shareholder with a significant stake in the company may have enough influence to control the composition of the board and the decisions made by the directors.
Employees as Stakeholders
- Employees have a health and safety interest in industries such as construction, manufacturing, and healthcare.
- Employees are one of the most important stakeholders of a business, and their performance can significantly affect the company's overall success.
- Companies invest a great deal of time and commitment in recruiting, training, and retaining good quality human resources.
- Employees earn an income to support themselves and may have a health and safety interest depending on the nature of the business.
- Employees make decisions about their work and working conditions after careful thought, as they are directly affected by these factors.
Shareholder Differences
- There can be differences in interests and objectives between the majority shareholder and minority shareholders, which may lead to conflicts or differing opinions.
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Description
Test your understanding of the differences between stakeholders and shareholders in a business. Explore the various interests and equity ownership associated with these roles.
