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SBL Summary Notes - Chapter 2

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9 views

SBL Summary Notes - Chapter 2

Uploaded by

zikrihelmi19
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Chapter 2: Stakeholders and Social Responsibilities

Agency relationship: a contract where one or Agent: a director that is interested in personal
more persons (P) engage another person (A) to gain from their employment.
perform some service on their behalf that
involves giving decision-making authority to Principal: a shareholder who is interested in
(A). wealth creation from their investment.
Agency monitoring system: steps to
Agency theory: study of the problems of
monitor their agents.
motivation and control when a principal needs
- Request formation of committees.
the help of an agent to carry out activities.
- Employ consultants.
- Increase numbers of NEDs.
Attend AGM and question board.
Agency problem: whereby shareholders (P) Stakeholder: someone who affects or is
rely on directors (A) to run the business for affected by an entity and who has a
them. corresponding claim.
- (P): would rather be paid the max amount - Internal: employees, management, the
of earnings. board.
- (A): may lead the company using strategies - Connected: shareholders, customers,
that are too risky, or too safe. suppliers.
- External: government, public,
competition, media.
Mendelow’s matrix: a way to assess Problems with stakeholder mapping:
stakeholders by looking at the power they - Difficult to measure each stakeholder’s
exert and the level of interest they have about power and influence.
its activities. - Map is not static.
- Key players (D): high power, high level - Map is based on idea of strategic
of interest. positioning.
- Kept satisfied (C): high power, low level - Fails to take legitimacy into account.
of interest. Fiduciary duty: a duty of care and trust which
- Kept informed (B): low power, high one person or entity owes to another. It can be
level of interest. legal or ethical obligation.
- Minimal effort (A): low power, low level
of interest.
Social responsibility (CSR): organisations Economic: expects some form of profitability
consider the interests of society by taking for investors.
responsibility for the impact of their activities. Legal: aspire to earn legal profits through legal
compliances.
Ethical stances: Ethical: acts in a fair and just way even if the
- long-term shareholder interest law does not compel them to do so.
- short-term shareholder interest Philanthropic: charitable donations,
- multiple stakeholder interest contributions to local communities, providing
- shaper of society employees
Integrated thinking: Active consideration by Integrated reporting: Process founded on
the organization of the relationships between integrated thinking that results in a periodic
its various operating and functional units and integrated report by an organization about
value creation over time and related
the capitals that the organization uses or
communication regarding aspects of value
affects. creation.

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