Essay on shareholders

We aximizat that creating shareholder value is the reward for taking acceptable risks.” (page 54) From a finance perspective the main objective of a firm is to aximiza shareholder wealth. However from the two statements above it appears that in reality companies don’t just focus on shareholders.

In the circumstance of shareholders have to a say on business executive compensation, to a certain extent it is affecting the office atmosphere. Corporate governance is used to facilitate effective, entrepreneurial and prudent management that can deliver success of the business in long term (The UK Corporate Governance Code, 2004).

Besides that, they also claimed that the shareholder theory prevent using corporate funds to donate some project or invest in improved employee environment. In fact, the shareholder theory supports the employee efforts such as those initiatives because it increases indirectly the shareholders’ wealth.

The relationship within a business structure is complicated, its board, its shareholders and its stakeholder. The business direction are given by corporate governance through the business objective set, meanwhile, it is determined to reach the goal and monitor the process (OECD, 2004).