Stockholder And Stakeholder Case Study

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1. Define Stockholder and stakeholder. What is the difference between the two?

A man who claims shares in an company and consequently gets some portion of the company's benefits and the privilege to vote on how the company is controlled.

A stakeholder is anyone who can influence or is influenced by an association, venture. They can be internal or external and they can be at senior or junior levels.

Difference between Stockholder and Stakeholder:

1. Stockholder ( Shareholder) is someone who has a financial share in the company
Stakeholder is someone who has an interest in the company

2.Stockholder is somebody who part possess the organization

stakeholder might not have money related enthusiasm
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Market Forces
2. Agency Costs

1. Market Forces: It is of two types
• Behaviour of security market participants: The participants include institutional investors actively participate in management. They use their voting right to replace more competent management.

• Hostile takeovers: It is the acquisition of the firm by another firm that is not supported by management. The constant threat to takeover motivate management to work for maximising owner’s wealth

2. Agency Costs: These are costs borne by shareholders to prevent agency problem as to maximise owner’s wealth. They have to incur 4 types of costs
• Monitoring – The exercises of the administration to avoid fulfilling and expanding proprietor's riches
• Bonding – Protects the proprietors from the results of deceptive acts by administration.
• Opportunity costs – Are those which comes about because of the failure of the firm to react to new open doors

• Structuring consumption – identifies with organizing administrative remuneration to maximise owner’s wealth
4. Describe internal controls and strategies that can be implemented to ensure ethical behaviour within a company

Ethics are the accepted principles of right or wrong that govern the conduct of a person, the members of a profession, or the actions of an

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