2.40 Stakeholders
Choose a local business in your area and make a list of its textbook solutions. Are some more important than others? List them in order of
priority.
textbook solutions could include (but are not limited to) the following: investors,
creditors, employees (and trade unions), customers, government, special
interest groups, community.
2.41 Corporate
governance and sustainability
I put it to you that the directors are responsible to the
shareholders for profit in perpetuity; and that this general expression of a
principle permits, indeed requires, directors to pay full regard to their
employees, to labour relations generally, to the community, to the country, in
all their decisions for and on behalf of textbook solutions. (Sir John Dunlop,
company director)
Discuss the implications of Sir John Dunlop’s statement.
The first part of the statement test bank shop clearly indicates that he believes a
corporation’s responsibility is to its shareholders. He indicates that this is
a duty in ‘perpetuity’ or in the long term. The second part then indicates that
he believes that to carry out this responsibility, a corporation has to
consider all stakeholders. It could be argued that he is professing the
‘enlightened self-interest’ principle.
2.42 Corporate Governance
Outline some of the legal constraints in legislating for the
consideration of stakeholder interests.
A number of constraints are listed below.
1. It would be difficult for a board to
be legally held accountable for all stakeholder interests. At times acting for
the benefit of one stakeholder group may clash with another stakeholder group.
2. It could be seen as infringing on
the property rights of the shareholders (who own the company).
3. There could be problems with
regulating how a board is held accountable in balancing test bank shop.
Could this be proved in a court of law? What evidence would be needed?
4. Identifying stakeholders that the
legislation would protect could be difficult.
5. Processes for stakeholders to
enforce their rights under the legislation could be difficult to establish.
6. Allowing a broader group to whom the
board is responsible may water down their responsibility to anyone.
Generally, many people may argue that most stakeholders or groups could
seek remedy under existing legislation (i.e. employees under workplace health
and safety laws and awards) and that expanding the duties of directors would
unduly increase their personal risk and liability resulting in a withdrawal of
leadership talent, without the commensurate benefits to society.
Those threats include self-interest, self-review, advocacy, familiarity
and intimidation. Examples from APES 110 are:
Examples of circumstances that
may create self-interest threats for
a Member in Public Practice include, but are not limited to:
• A Financial
Interest in a Client.
• Jointly
holding a Financial Interest with a Client.
• Undue
dependence on total fees from a Client.
• Having a
close business relationship with a Client.
• Concern about
the possibility of losing a Client.
• test bank shop.
• Contingent
Fees relating to an Assurance Engagement.
• A loan to or
from an Assurance Client or any of its Directors or Officers.
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