what is the difference between stakeholders and shares?

Answer 1

When you invest in shares of a company, you’re actually buying a share of the business, which makes you a stockholder (or shareholder) of that company. Your investment will pay off if the company does well and makes a profit. Let's say you start a company with your wife and the co. issues 1,000 shares, 500 to you and her each. You'd then own 50% of the co., same as your wife.

A stockholder or shareholder is a stakeholder of the co., but not all stakeholders are stockholders/shareholders. Stakeholders are people who have in interest in the co. for various reasons. E.g. a creditor is interested in your co. in case you go bust and can't pay him. Here is a list of common stakeholders and the reasons why they might be interested in a co.

(a) Investors. The providers of risk capital and their advisers are concerned with the risk inherent in, and return provided by, their investments. They need information to help them determine whether they should buy, hold or sell. Shareholders are also interested in information which enables them to assess the ability of the enterprise to pay dividends.

(b) Employees. Employees and their representative groups are interested in information about the stability and profitability of their employers. They are also interested in information which enables them to assess the ability of the enterprise to provide remuneration, retirement benefits and employment opportunities.

(c) Lenders. Lenders are interested in information that enables them to determine whether their loans, and the interest attaching to them, will be paid when due.

(d) Suppliers and other trade creditors. Suppliers and other creditors are interested in information that enables them to determine whether amounts owing to them will be paid when due. Trade creditors are likely to be interested in an enterprise over a shorter period than lenders unless they are dependent upon the continuation of the enterprise as a major customer.

(e) Customers. Customers have an interest in information about the continuance of an enterprise, especially when they have a long-term involvement with, or are dependent on, the enterprise.

(f) Governments and their agencies. Governments and their agencies are interested in the allocation of resources and, therefore, the activities of enterprises. They also require information in order to regulate the activities of enterprises, determine taxation policies and as the basis for national income and similar statistics.

(g) Public. Enterprises affect members of the public in a variety of ways. For example, enterprises may make a substantial contribution to the local economy in many ways including the number of people they employ and their patronage of local suppliers. Financial statements may assist the public by providing information about the trends and recent developments in the prosperity of the enterprise and the range of its activities.