ACCA Strategic Professional · Advanced Financial Management · Corporate environmental, social, governance (ESG) and ethical issues

A listed multinational states its primary objective as maximising shareholder wealth. Which of the following best describes the stakeholder theory view of corporate objectives, contrasted with this?

Stakeholder theory says managers should balance the legitimate interests of all groups affected by the firm, such as employees, customers, communities and lenders, because long-term value depends on those relationships. This contrasts with the narrower shareholder-primacy view of maximising shareholder wealth alone.

1. AManagers should balance the legitimate interests of all affected groups, since long-term value depends on themCorrect
2. BManagers should ignore all non-shareholder groups unless legally compelled
3. COnly lenders' interests should be protected because they have contractual claims
4. DCorporate objectives are irrelevant when markets are efficient