Skip to content

ACCA Strategic Professional · Strategic Business Leader · Reporting to stakeholders

Halden Retail is a listed company. Its employees' union argues that the annual report should give far more information on workforce conditions and pay ratios, while the board says the report is 'for shareholders'. Which governance view best supports the union's request?

The stakeholder, or inclusive, approach best supports the union. It sees the company as accountable to a broad group, including employees, whose conditions affect long-term success, so reporting on workforce matters and pay ratios is justified, unlike under a narrow shareholder primacy view.

  1. AThe stakeholder (inclusive) approach, which holds that the company is accountable to a wider group whose interests affect long-term successCorrect
  2. BThe narrow shareholder primacy approach, which limits accountability to owners
  3. CThe agency view, which says managers should minimise disclosure
  4. DThe view that employees have no interest in company performance

Explanation

The inclusive stakeholder approach to governance and reporting accepts accountability to groups beyond shareholders, such as employees, whose welfare affects long-term performance. Shareholder primacy supports the board's position, so it does not back the union. Agency theory concerns owner-manager relations and does not argue for minimal disclosure.

Did you get it right without looking?

One question tells you little. A timed set on Reporting to stakeholders shows your real accuracy, how long you take and where you lose marks.

Practise Reporting to stakeholdersFree diagnostic mock

More Reporting to stakeholders questions