They just want to make sure that things are moving forward as planned. However, during a presentation, you might get some questions thrown at you that will demand a deeper look. We’ve written about what a stakeholder is before, and the definition still stands. A stakeholder can be either an individual, a group or an organization impacted by the outcome of a project.

Stakeholder theory, on the other hand, notes that it’s the business manager’s ethical duty to both corporate shareholders and the community at large that the activities that benefit the company don’t harm the community. The biggest difference between the two is that shareholders focus on a return of their investment. Shareholders include equity shareholders and preference shareholders in the company.

Company Ownership

Stakeholders sometimes also have shares in the company, as in the case of employee shareholders. Shareholders own part of the business, determined by the number of shares they own. A majority shareholder is an individual or entity owning at least 50% of the company’s outstanding shares. “Shareholders” and “stakeholders” are two terms within project management that sound similar but have very different meanings.

If shareholders have some concerns about how the top executives are running the company, they have a right to be granted access to its financial records. If shareholders notice anything unusual in the financial records, they can sue the company directors and senior officers. Also, shareholders have a right to a proportionate allocation how to find tax records for a business of proceeds when the company’s assets are sold either due to bankruptcy or dissolution. They, however, receive their share of the proceeds after creditors and preferred shareholders have been paid. Although shareholders are owners of the company, they are not liable for the company’s debts or other arising financial obligations.

• Stakeholders are individuals, groups of individuals, or an entity who are interested in the company for reasons other than the company’s stock performances.
• If the company’s share price increases, the shareholder’s value increases, while if the company performs poorly and its stock price declines, then the shareholder’s value decreases.
• If shareholders have some concerns about how the top executives are running the company, they have a right to be granted access to its financial records.
• However, during a presentation, you might get some questions thrown at you that will demand a deeper look.
• In light of this fact, all companies would do well to communicate with their stakeholders.

Internal stakeholders are also more often than not mentioned as primary stakeholders or key stakeholders because they have a direct “stake” in the company and play an important role in the company’s or project’s success. A shareholder is an individual or organization that owns shares in a publicly-traded or privately held company and, therefore, has an interest in its profitability. Depending on the types of shares they own, they can receive dividends, vote on corporate policy or amendments, or elect a board of directors. On the other hand, stakeholder theory helps you act responsibly towards your employees, customers, and business partners. By prioritizing your immediate project stakeholders (both internal and external), you can create better work environments that promote both employee well-being and customer satisfaction. And when your team feels heard, they’re more motivated to do their best work and help projects succeed.

Shareholder vs. stakeholder: What’s the difference?

Stakeholders and shareholders will love the transparency ProjectManager gives them into the project. Shareholder theory claims corporation managers have a duty to maximize shareholder returns. Economist Milton Friedman introduced this idea in the 1960s, which states a corporation is primarily responsible to its shareholders. For example, a shareholder is always a stakeholder in a corporation, but a stakeholder is not always a shareholder. The distinction lies in their relationship to the corporation and their priorities.

Are Shareholders or Stakeholders More Important?

As a group, they can impact the company’s trading volume, which can in turn affect share prices. They hope to drive up share costs, as they’ll earn a bump in their portfolio value (or collect occasional dividends) by doing so. Many shareholders in a given company have regular meetings, either virtually or in person. At these meetings, they generally have the option to vote on company business, like appointing candidates to the Board of Directors. They own shares or equity in a corporation and are considered co-owners in a way. It also means that stockholders will likely see the value of their stocks go down.

Shareholders are owners of the company, but they are not liable for the company’s debts. For private companies, sole proprietorships, and partnerships, the owners are liable for the company’s debts. Stakeholders are important as they can have a positive and negative influence on the company, and their support is pivotal for the project of the company to exist.

What is a Stakeholder?

Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team. Stakeholder management is a process that happens throughout the duration of the project, not just in the beginning stages. And, if the company is large enough, like the automobile companies during the Great Recession years, the impact could even be felt on a national level. That means they have a limited liability as far as the obligations of the company are considered. The similarity between the two words is understandable — both refer to people or groups who invest or have an interest in a certain company. The Ascent is a Motley Fool service that rates and reviews essential products for your everyday money matters.

And when stock prices go up, you have an opportunity to sell your shares and make a profit. Every company raises capital from the market by issuing shares to the general public. The shareholder is the person who has bought the shares of the company either from the primary market or secondary market, after which he has got the legal part ownership in the capital of the company. Share Certificate is given to every individual shareholder for the number of shares held by him.

What Is a Shareholder?

In other words, a stockholder isn’t the only party having a stake in the corporation. The measures a company takes must be legal, but the bottom line is increasing share prices (a concept known as shareholder primacy). Shareholder capitalism drives management actions like hiring and layoffs, price-cutting, budgeting and expansion. Even with overlapping long-term concerns between the two, the primary difference goes back to motivation. Shareholders are driven by profits, while stakeholders are focused on fairness and change.