Question

Please give specific examples of how the framework of corporate accountability to shareholders is, or is not, an extension of agency and partnership law principles.   

Answer 1

Framework of Corporate accountability to shareholder is not an extension of agency and partnership law principal because shareholders will always want for maximization of the overall share value and they will always try to introduce management to all such. possibility of maximizing the share value of the company which will increase the shareholders worth, and hence these Corporates framework of social accountability is inclined towards doing the corporate work beyond the profitability of the business because it will be trying to perform in accordance with the maximization of the value of the organisation by protecting of the interest of the stakeholders and performing of the social responsibility which is not directly correlated with maximization of the shareholders value.

For example, If the company is expanding towards social welfare and it is undertaking social awareness program, then it will be leading to protection of interest of the stakeholders and performance of duty towards the society but it will increase the sustainability of Organisation in the long run and shareholders will always want to maximize their value in the short run, so shareholders are not synchronised with these decisions of the organisation because these decisions are not in line with their goals of of shareholders wealth maximization.