Maximizing Shareholder Value

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MAXIMIZING SHAREHOLDER VALUE

Maximizing Shareholder Value

Introduction

"Stakeholder" is a term bandied about professors, intellectuals, and others who subscribe to the notion that equality of outcome rather than equality of opportunity is a goal that ownership can be neglected when the cause is noble enough and intentions quite well, and that voice in corporate governance should not be accompanied by risk. The popularity of this concept over the past 35 years has created a void in analytical thought. The term "stakeholder" grows up in everything from community meetings and websites to staff meetings and annual reports(Das Basu 2004 206). It's amazing to see how many heads to extol the importance of stakeholders, as by subscribing to the theory of stakeholders as a means of corporate governance, they send the following message to shareholders: "I understand you have investments in the corporation, but these other people came along, and, well, they talk a good game, so I'll report back to them.

There are several inherent weaknesses in the theory of stakeholders. I will present the weaknesses as well as a brief history of the theory of the origin and development. Deficiencies in the theory of stakeholders are too vague in defining and implementing its disregard of property rights, its obstacle in the capitalist economy and its promotion of the class struggle. Who exactly are the stakeholders?

It is a law of nature that, if the conditions of his theory cannot be determined, there could be problems with the theory. One can only imagine how the laws of physics would look like if physicists cannot agree on the definition of gravity(Coopers2003 161). Commitments to stakeholders

Even if we assume that scientists are able to reach agreement on the actual definition of "interested parties", there is one more obstacle for the application of stakeholder theory: no one seems certain how the theory should work. Nebulous notion of "fairness" seems to underlie the theory, but we have no agreed definition of the term, except in the context of the theory of social contract (Atrill McLaney 2009 536). Consequently, the rights and obligations under the theory of stakeholders depend on an understanding of the term "stakeholder", which brings us back to the original problem definition. The classic example used in the concerned literature, Adam and the apple orchard.Adam still plucks an apple from the tree, but he refuses to help grow apples. Adam accepts, but he does not. Instead of punishing Adam in terms of communal existence of a (free-rider problem), stakeholder theorists liken Adam to corporations who understand the basic social contract, but take without making the necessary contributions. "Adam's apple" example is used to support the following definition of social contract and the concept of justice underlying the theory of stakeholders.Taking the input of stakeholders

Assuming that we can overcome these problems and determine solutions to operational issues on how to work the theory of stakeholders, is the logistical problem of how stakeholders participate in corporate governance (Doyle 2001 ...
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