Bower and Paine (2017) argue that the obsession with maximising shareholder value reflects 'failure at the heart of corporate leadership'. Do you agree or disagree with their position? Outline and discuss their arguments drawing on relevant theoretical approaches to shareholder value.

 Developing sights of the stakeholder theory suggest means to change societal difficulties into win-win resolutions for the society and the firm.

Despite its achievement in exploring the dissecting of the importance of the firm in public, the stakeholder theory has had two significant drawbacks. Firstly, it is heavily reliant on regulations as the compensatory system for the externalities it produces (Williams, 2006).

On a fair argument, it is right to say that at its current stage of development, the stakeholder theory has not left its limits of economic worth maximisation.

Secondly, it is still fixed to the traditional view of the firm's definition that its primary purpose is the creation of economic value for its owners and itself (Simonetti, 2014).

Discussion owning to the above demerits have arisen on how to alleviate these demerits by proposing a solution which will create societal value.

For this reason, this paper interrupts the advancement of the stakeholder theory to propose a theoretical model generated from the examination of the most excellent practices of prosperous companies. This is to be achieved by an intention to redefine the firm's purpose. That is a purpose-driven by societal goals and not solely by profit maximisation.

 

Relevant theoretical approaches to shareholder value.

Case Study (a) Alternative Bank Schweiz 

A survey was undertaken in Switzerland (1982) discovered an existing demand for a substitute for current banks. The stakeholders (mostly customers) who can do my coursework were inquiring for a remedy which would uphold societal values while ensuring banks discharge the sole motive of maximising profit. ABS’ authors, using an outside-in method, suggested a new kind of bank system as the remedy to the need. This entails a set of good practices which if well observed, would alleviate the issue.

 Purposed definition

This involves defining the company's values and purpose. This is done on a consensus basis amongst the firm's stakeholders.  pay someone to do my term paper The firm’s description should be more centred on pursing ethical doctrines as opposed to profit maximisation (Jensen, 2000). ABS looks at the larger picture to identify environmental, social and governance insufficiencies in that context in bid to address societal needs.

Transparency

Since ABS doesn’t solely purse profit motives, it had to request stakeholders contribution inform of higher interest to customers and low returns to shareholders in a bid to support the societal goals. In exchange, the most top form of transparency affordable term papers is to be maintained by informing stakeholders how the company's products generate shared value. A good example is a publication created by ABS called Moneta, which provides information on the loans offered by the bank. The paper illustrates the shared value derived from the loans. Pay someone to do my assignment for me

 

Limiting Shareholder Power

ABS approach established two safeguard mechanisms to deter power digression from its intended use. The first mechanism was to set a cap on share ownership. The cap was set at 3% but later increased to 5% in 2014. This is in bid to increase consensus amongst the shareholder's decisions. 

The second safeguard mechanism involved picking the right clientele of shareholders who would finance the company (Johal, 2006). The company would only allow like-minded individuals, i.e. individuals, corporations and public entities which were ready to support the company's goals and ideals of promoting social welfare. It would inhibit shareholders who would jeopardise their objectives from investing in the company.

 

Case study (b) Merkur Cooperative Bank

Merkur established a significant demand for small and medium enterprises (SMEs) that would generally fail to qualify for loans from mainstream banks. To respond to this gap, Merkur was proposed as the remedy. It established private loans and savings associations into cooperative bank gradually.  According to Merkur, “a bank is a link between people with ideas and people with money.” This branded Merkur as a bank which enabled stakeholders to use their funds to promote a sustainable society by issuing loans.

Just like the ABS approach, Merkur’s methodology to describing its purpose varies from the shareholder theory as it well diverges from the profit maximisation objective to follow maximisation of societal welfare. More interestingly, Merkur’s approach also acknowledged the significance of communicating with shareholders. However, it developed a slightly different method from the one adopted in ABS's plan, as illustrated below.

Communicating with Stakeholders 

The bank defined its drive into established core values offering its workers with an outline to guide their undertakings. Just like ABS, those undertakings were required to be transparent because the bank had its customers and cooperative members pay higher interest rates and accept lower dividends to fund its commitments. Merkur’s Write Papers for Money.

 approach developed a website letting its users view each venture the bank funded. It provided a short overview of the enterprise, the drive it served, its setting and other additional information that is where more information was required.

This shared website not only acted as a control device as it allowed users to evaluate the quality of the venture in contrast to the bank’s standards and speak out disquiets if any to elicit an amendment but also served the principal purpose of informing stakeholders. 

ABS approach feared the potentially harmful influence of shareholders on its objectives (Stockhammer, 2005). Similarly, Merkur approach was also on the lookout as it made attempts to inhibit such. However, Merkur’s proposal Buy Essay Online Cheap.

did not use ownership caps but adopted a one man one vote system. This enables the bank to raise more funds from the shareholders without necessarily increasing their voting rights. 

Conclusion

A review of the two approaches proves a lot of ways to alleviate the downsides of overhyped shareholders theory. The first approach entails a set of courses of action to be followed, which are: redefining the company's purpose, enhancing transparency and limiting shareholders voting powers Research Paper for Sale 

 

The second approach also limits shareholders voting rights by adopting a one man, one vote system. It is also focused on revitalising the communication between shareholders and the managers.