{"id":132,"date":"2023-08-03T11:11:59","date_gmt":"2023-08-03T15:11:59","guid":{"rendered":"https:\/\/pressbooks.library.torontomu.ca\/cebe\/chapter\/__unknown__-34\/"},"modified":"2023-08-22T12:13:52","modified_gmt":"2023-08-22T16:13:52","slug":"shareholders","status":"publish","type":"chapter","link":"https:\/\/pressbooks.library.torontomu.ca\/cebe\/chapter\/shareholders\/","title":{"raw":"Shareholders","rendered":"Shareholders"},"content":{"raw":"<p class=\"p1\"><strong>Shareholders<\/strong> (sometimes informally called <em>stockholders)<\/em>\u00a0are people who have purchased a share (or stock) in a company. Shareholders own equity in a company. In most cases, this\u00a0gives them a legal right to:<\/p>\r\n\r\n<ul>\r\n \t<li class=\"p1\">vote in the election of the company\u2019s board of directors;<\/li>\r\n \t<li class=\"p1\">a share in the company\u2019s \u201cresidual earnings\u201d (profits the company has after its other obligations \u2013 salaries, bills, etc. \u2013 are paid); and<\/li>\r\n \t<li class=\"p1\">the loyalty and care of the company\u2019s managers.<\/li>\r\n<\/ul>\r\n<p class=\"p1\">Shareholders are often referred to as the \u201cowners\u201d of the corporation, but this is arguably inaccurate.\u00a0Strictly speaking, what they own is shares in the company, which\u00a0means that what they \u201cown\u201d is a piece of the governing power of the organization (i.e., a right to vote on the board\u2019s membership) and the right to a share of whatever\u00a0dividends the board sees fit to distribute.<\/p>\r\n<p class=\"p1\">There is considerable debate over the notion of \u201cshareholder primacy,\u201d the idea that the firm is in some way \u201cabout\u201d shareholders\u2019 interests in the corporation and, therefore, that managers should \u201cput shareholders first.\u201d Part of the problem is that there is disagreement and confusion over just what it\u00a0<em>means<\/em> to put shareholders first. Another confusion, pointed out by the legal scholar Stephen Bainbridge, is that the idea that a firm\u2019s management ought to extend fiduciary care only to the firm\u2019s shareholders is the same as shareholder primacy. In Bainbridge\u2019s view, the firm is \u201cabout\u201d the board of directors, but the board is bound by a duty of fiduciary care to shareholders.<\/p>\r\nAnother interesting question about shareholders surrounds whether there are shareholder responsibilities in (or to) the corporation or others and what those responsibilities might be. Are shareholders responsible for corporate wrongdoing in any but a (limited) financial way? If so, what should shareholders do about corporate wrongdoing? Shareholder activism is a phenomenon that sees shareholders attempting to influence the managerial direction of corporations\u2014whether to be more focused on increasing shareholder returns or to pursue more or better <a href=\"https:\/\/pressbooks.library.torontomu.ca\/cebe\/chapter\/csr\/\">corporate social responsibility<\/a> initiatives. While some applaud the movement toward shareholder activism, others see it as undercutting one of the principal features of the corporation: the separation of ownership and control.\r\n\r\n<strong>See also in CEBE:<\/strong>\r\n<ul>\r\n \t<li><a title=\"Corporate Governance\" href=\"https:\/\/pressbooks.library.torontomu.ca\/cebe\/chapter\/corporate-governance\/\">Corporate Governance<\/a><\/li>\r\n \t<li><a title=\"Stakeholder\" href=\"https:\/\/pressbooks.library.torontomu.ca\/cebe\/chapter\/stakeholder\/\">Stakeholder<\/a><\/li>\r\n<\/ul>\r\n<p class=\"p3\"><b>Further Reading:<\/b><\/p>\r\n\r\n<ul>\r\n \t<li>Henry Hansmann,\u00a0<a href=\"https:\/\/href.li\/?http:\/\/www.amazon.com\/exec\/obidos\/ASIN\/0674001710\/ethics\" rel=\"noreferrer\"><em>The Ownership of Enterprise<\/em><\/a>, 2000<\/li>\r\n<\/ul>\r\n<div id=\"jp-post-flair\" class=\"sharedaddy sd-like-enabled sd-sharing-enabled\"><\/div>","rendered":"<p class=\"p1\"><strong>Shareholders<\/strong> (sometimes informally called <em>stockholders)<\/em>\u00a0are people who have purchased a share (or stock) in a company. Shareholders own equity in a company. In most cases, this\u00a0gives them a legal right to:<\/p>\n<ul>\n<li class=\"p1\">vote in the election of the company\u2019s board of directors;<\/li>\n<li class=\"p1\">a share in the company\u2019s \u201cresidual earnings\u201d (profits the company has after its other obligations \u2013 salaries, bills, etc. \u2013 are paid); and<\/li>\n<li class=\"p1\">the loyalty and care of the company\u2019s managers.<\/li>\n<\/ul>\n<p class=\"p1\">Shareholders are often referred to as the \u201cowners\u201d of the corporation, but this is arguably inaccurate.\u00a0Strictly speaking, what they own is shares in the company, which\u00a0means that what they \u201cown\u201d is a piece of the governing power of the organization (i.e., a right to vote on the board\u2019s membership) and the right to a share of whatever\u00a0dividends the board sees fit to distribute.<\/p>\n<p class=\"p1\">There is considerable debate over the notion of \u201cshareholder primacy,\u201d the idea that the firm is in some way \u201cabout\u201d shareholders\u2019 interests in the corporation and, therefore, that managers should \u201cput shareholders first.\u201d Part of the problem is that there is disagreement and confusion over just what it\u00a0<em>means<\/em> to put shareholders first. Another confusion, pointed out by the legal scholar Stephen Bainbridge, is that the idea that a firm\u2019s management ought to extend fiduciary care only to the firm\u2019s shareholders is the same as shareholder primacy. In Bainbridge\u2019s view, the firm is \u201cabout\u201d the board of directors, but the board is bound by a duty of fiduciary care to shareholders.<\/p>\n<p>Another interesting question about shareholders surrounds whether there are shareholder responsibilities in (or to) the corporation or others and what those responsibilities might be. Are shareholders responsible for corporate wrongdoing in any but a (limited) financial way? If so, what should shareholders do about corporate wrongdoing? Shareholder activism is a phenomenon that sees shareholders attempting to influence the managerial direction of corporations\u2014whether to be more focused on increasing shareholder returns or to pursue more or better <a href=\"https:\/\/pressbooks.library.torontomu.ca\/cebe\/chapter\/csr\/\">corporate social responsibility<\/a> initiatives. While some applaud the movement toward shareholder activism, others see it as undercutting one of the principal features of the corporation: the separation of ownership and control.<\/p>\n<p><strong>See also in CEBE:<\/strong><\/p>\n<ul>\n<li><a title=\"Corporate Governance\" href=\"https:\/\/pressbooks.library.torontomu.ca\/cebe\/chapter\/corporate-governance\/\">Corporate Governance<\/a><\/li>\n<li><a title=\"Stakeholder\" href=\"https:\/\/pressbooks.library.torontomu.ca\/cebe\/chapter\/stakeholder\/\">Stakeholder<\/a><\/li>\n<\/ul>\n<p class=\"p3\"><b>Further Reading:<\/b><\/p>\n<ul>\n<li>Henry Hansmann,\u00a0<a href=\"https:\/\/href.li\/?http:\/\/www.amazon.com\/exec\/obidos\/ASIN\/0674001710\/ethics\" rel=\"noreferrer\"><em>The Ownership of Enterprise<\/em><\/a>, 2000<\/li>\n<\/ul>\n<div id=\"jp-post-flair\" class=\"sharedaddy sd-like-enabled sd-sharing-enabled\"><\/div>\n","protected":false},"author":504,"menu_order":34,"template":"","meta":{"pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[],"contributor":[],"license":[],"class_list":["post-132","chapter","type-chapter","status-publish","hentry"],"part":3,"_links":{"self":[{"href":"https:\/\/pressbooks.library.torontomu.ca\/cebe\/wp-json\/pressbooks\/v2\/chapters\/132","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/pressbooks.library.torontomu.ca\/cebe\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/pressbooks.library.torontomu.ca\/cebe\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/pressbooks.library.torontomu.ca\/cebe\/wp-json\/wp\/v2\/users\/504"}],"version-history":[{"count":3,"href":"https:\/\/pressbooks.library.torontomu.ca\/cebe\/wp-json\/pressbooks\/v2\/chapters\/132\/revisions"}],"predecessor-version":[{"id":225,"href":"https:\/\/pressbooks.library.torontomu.ca\/cebe\/wp-json\/pressbooks\/v2\/chapters\/132\/revisions\/225"}],"part":[{"href":"https:\/\/pressbooks.library.torontomu.ca\/cebe\/wp-json\/pressbooks\/v2\/parts\/3"}],"metadata":[{"href":"https:\/\/pressbooks.library.torontomu.ca\/cebe\/wp-json\/pressbooks\/v2\/chapters\/132\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/pressbooks.library.torontomu.ca\/cebe\/wp-json\/wp\/v2\/media?parent=132"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/pressbooks.library.torontomu.ca\/cebe\/wp-json\/pressbooks\/v2\/chapter-type?post=132"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/pressbooks.library.torontomu.ca\/cebe\/wp-json\/wp\/v2\/contributor?post=132"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/pressbooks.library.torontomu.ca\/cebe\/wp-json\/wp\/v2\/license?post=132"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}