Shareholders v. Stakeholders

 

June 30th, 2021

 

These days, it seems like the terms shareholder and stakeholder get thrown around easily. This week, let's take a look into the key difference between a shareholder and a stakeholder. The Role of the Shareholder A shareholder, as the name suggests, owns at least one share of a company. A shareholder can be an individual, company, or institution. Shareholders generally have a financial interest in the company's profitability. When we think of shareholders, we usually think about an individual who wants to see the stock price increase. Shareholders have the right to vote on the management of the company that they're invested in. While shareholders are technically owners of a company, they are not liable for company debts. They are able to sell their shares at any given time. The Role of the Stakeholder While anyone can be a shareholder, only few people are considered stakeholders. Stakeholders generally include owners and employees of a company or bondholders. Because shareholders can sell and buy different stock, they do not have a long-term need for the company. Stakeholders, however, are bound to the company for a longer term and for reasons of greater need. Let's take a look at employees as an example. Employees depend on the company's success because the company's success will allow employees to keep their jobs.

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