Primary Stakeholders

This chapter examines the shareholder as a primary stakeholder and the relationship of the shareholder with the company. It explores the role of shareholders and the responsibilities companies have toward them. The chapter also examines the relationship between the company and a shareholder by understanding agency theory. Shareholders are legal owners of business corporations. Shareholders invest their money in businesses hoping for a return on their investment. There are two main types of shareholders: individual shareholders and large shareholders. Individual shareholders include regular persons buying and selling shares of any company. Large shareholders can have significant influence on the way companies are run. Such shareholders can hold board of director seats and directly influence the company. However, other large shareholders can have indirect influence by threatening to liquidate their shares. While the US sees companies largely owned by small shareholders, the German corporate environment traditionally saw ownership in the form of large block-holders.