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The Friedman doctrine, also called shareholder theory, is a normative theory of business ethics advanced by economist Milton Friedman that holds that the social responsibility of business is to increase its profits. [1] This shareholder primacy approach views shareholders as the economic engine of the organization and the only group to which ...
A beneficial shareholder is the person or legal entity that has the economic benefit of ownership of the shares, while a nominee shareholder is the person or entity that is on the corporation's register of members as the owner while being in reality that person acts for the benefit or at the direction of the beneficial owner, whether disclosed or not.
In a joint-stock company, the members are known as shareholders, and each of their shares in the ownership, control, and profits of the corporation is determined by the portion of shares in the company that they own. Thus, a person who owns a quarter of the shares of a joint-stock company owns a quarter of the company, is entitled to a quarter ...
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Shareholders are granted special privileges depending on the class of stock, including the right to vote on matters such as elections to the board of directors, the right to share in distributions of the company's income, the right to purchase new shares issued by the company, and the right to a company's assets during a liquidation of the ...
Similarly, the directors and shareholders face the principal-agent problem, where the directors may fail to properly represent the interests of the shareholders and may be in violation of their legal fiduciary obligations. Passive shareholders may disengage from the shareholder democracy model, a phenomenon known as shareholder apathy.
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Waste Management's shareholders lost more than $6 billion in the market value of their investments when the stock price plummeted by more than 33%. [7] The company had augmented the depreciation time length for their property, plant, and equipment, artificially inflating the company's after-tax profits by US$1.7 billion.