Paper Summary:

This essay discusses the ways in which a stakeholder approach to corporate governance would differ from the existing system of a stockholder approach in the UK. A definition of corporate governance is provided along with the differences between stakeholder and stockholder approaches to this particular issue. The extent to which a stakeholder approach would change the existing system is also investigated. References and evidence to support these arguments are provided throughout the essay.

From the Paper:

"The new proposal of corporate governance is that of a stakeholder approach. The fundamental principle behind this concept is that shareholders are no longer the only members of an organization who have an interest in the conduct and performance of the company. This is supported by Demb & Neubauer (1992) who state "corporate governance is the process by which corporations are made responsive to the rights and wishes of stakeholders". J. Kay (1995) also states "it is the purpose of companies to maximize its profits or to develop its business in the interests of customers, employees, suppliers and other stakeholders in the wider community." "

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