Importance of Shareholders
1. Ownership and Capital: The shareholders are the recipients of the company’s capital needs, such as for operating and expanding the business, and act as organization owners.
2. Corporate Governance: Shareholders act as the main players in corporate governance by nominating and electing the company’s board of directors, and making the board answerable and transparent in its actions, as well as setting ethical standards.
3. Risk Management: Besides sharing the responsibility for the company’s longevity, shareholders are likely to get involved with risk management to protect the long-term stability of the business.
4. Market Discipline: The market forces drive shareholders towards attentive monitoring of the firm’s performance as well as their contribution to its stock prices. Hence, it results in the introduction of responsible business conduct and in justifying performance improvement.
5. Corporate Performance: Performing well at investors’ aspect converges with the firm’s Profits, stimulating leadership approaches that ensure growth, innovation, and competitiveness.