Corporate

Question 1

Shareholder Theory

Answer 1

States that the main focus of a system of corporate governance is the interests of the firm’s shareholders, which are taken to be the maximization of the market value of the firm’s common equity.

Under this theory, corporate governance is primarily concerned
with the conflicts of interest between the firm’s managers and its owners (shareholders)

Question 2

Stakeholder Theory

Answer 2

Main focus considers conflicts among the several groups that have an interest in the activities and performance of the firm.

Question 3

Shareholder

Answer 3

Have a residual interest in the corporation in that they have claim to the net assets of the corporation after all liabilities have been settled