Agency theory Essay Example | Topics and Well Written Essays - 1000 words - 1

Agency theory - Essay Example Freeman states that stakeholder concept is about management, and it mirrors and guides how managers function rather than chiefly addressing management and economists’ theories (1994). Freeman states two key enquiries of the stakeholder concept in his article. The first query is the aim of the corporation. This is useful and helpful for managers in the 21st century. Managers, by determining the purpose of the firm, can state the share’s responsiveness for the value they create. Managers can also determine what brings the key stakeholders together. Furthermore, this challenges the firm to establish sound performance through considering its goals and market fiscal metrics. The other question enquired in the shareholder concept is what accountability management has to shareholders. These aid managers to understand how they plan to carry out business. Predominantly, they look for a suitable kind of association with shareholders to attain their own welfares. The fundamental o f shareholder theory’s economic importance is that great numbers of persons come and function together to enhance their situation, in conformity with the central modern economic realisms. To urge more and more workforces to perform their finest for the corporations, it is essential and vital for supervisors to develop relations and create effective communication with shareholders. It is broadly accepted that stockholder is a significant party within the firm and his or her interests are a dire characteristic.