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2.27     What is meant by the term ‘shareholder value’?

 The view that holds that the purpose of the corporation is to maximise shareholder wealth. Shareholders are the owners of the entity and it is through this ownership and their legal standing in relation to their rights and responsibilities that have past papers traditionally seen shareholders as the primary focus in business decision making

2.28     Explain the following:

a)  triple bottom line reporting;

Triple bottom line reporting refers to the economic, social and environmental performance of a company. Elkington proposes that a company’s long term viability is a function of how well it can balance the three areas. The concept supports the view that companies have a duty of care to society at large. The movement is developing performance measures to assist the analysis of social and environmental performance.

b) past papers

Corporate governance refers to the direction, control and management of an enterprise.

c) the relationship of stakeholders to corporate governance.

There is much debate in business literature as to whether an organisation’s sole responsibility is to its shareholders, or whether there is a wider duty of care for organisations to identify all the values and principles at stake. A theory called ‘stakeholder theory’ proposes that the purpose of the firm ‘is to serve as a vehicle for coordinating stakeholder interests’, not the narrow view that the purpose is to maximise shareholder wealth. After all, the firm is an artificial entity and the shareholder purpose of the firm is simply based on the shareholder’s right to property. Proponents of stakeholder theory view the purpose of a firm as far greater past papers available.

It is related to corporate governance because corporate governance is about the direction, control and management of organisations. Therefore, the management  purchase test banks of the nation’s capital and operations rests on the philosophy of the company directors that have the responsibility to govern enterprises. How and to what extent they consider all stakeholder views will have an impact on society in the long term.

2.29     Discuss the relevance of legitimacy theory to corporations.

The basic tenant of this theory suggests that entities, to remain legitimate, must operate within the bounds and norms of society. In other words, society allows the entity to operate (pursue their objectives and rewards) so long as the entity agrees to act in a socially purchase test banks acceptable manner. Proponents of legitimacy theory call this the ‘social contract’. The ‘social contract’ represents the explicit and implicit expectations that society has about how the organisation should conduct it operations. An organisation must be responsive to these expectations as they change over time.

2.30     Outline the possible consequences for an entity that breaches its ‘social contract’.

Sanctions, a reduced demand for products or a limitation on available resources could be some consequences for breaking the social contract.

2.31     Outline the corporate governance principles and recommendations.

The Australian Stock Exchange (ASX) corporate governance principles and recommendations 2^nd edition, are:

1.      Lay solid foundations for management and oversight

2.      purchase test banks

3.      Promote ethical and responsible decision making

4.      Safeguard integrity in financial reporting

5.      Make timely and balanced disclosure

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