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ACCA Applied Knowledge · Business and Technology · Governance in business organisations

Which approach to stakeholders best reflects the view that directors should consider the interests of employees, customers and the community, not only shareholders?

This is the stakeholder approach, which says the board should balance the interests of all groups affected by the company, including employees, customers and the community. Shareholder primacy focuses mainly on shareholder returns, so it does not fit the description given.

  1. AThe stakeholder approachCorrect
  2. BThe shareholder primacy approach
  3. CThe agency cost approach

Explanation

The stakeholder approach holds that the board should balance the interests of all affected groups. Shareholder primacy focuses on shareholder wealth, and agency cost concerns conflicts between owners and managers.

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