7q1 and 7 q2
Thevalue of the shareholders and their financial accomplishments shouldbe given priority by the management of any organization.
Themain objective of the shareholders is to maximize the value of thecorporation, a function that is performed by the company managementwho make efficient use of the company resource allocation so thatmaximum returns can be yielded (Mauboussin, 2011). It is advantageousfor shareholders to concentrate on value and monetary targets ratherthan profit because maximization of profits is harmful to thecompany’s growth and the economy at large. Companies need tomaximize the value of shareholders by investing and dedicating anyexcess profits in creating value amongst those who help it earn thatprofit (Blodget, 2012). The corporate structure can either have apositive or negative effect on the maximization of the shareholdersvalue and monetary targets. This happens during voting especially ifthe majority fall do not favor the value of the shareholders (Picker,2016). The inclusion of other employees and unions in the governancewill, therefore, help in fulfilling the objective of valuemaximization.
TheCPA corporations should concentrate on the shareholder value justlike the other enterprises in the business industry.
Inmost accounting firms whether small or large, the stakeholders arethe same however, they may differ in number because of the size ofthe firm. Nevertheless, the key stakeholders are the employees, theclients, and the accounting regulators. It is of equal importance todevelop a governance structure that emphasizes on value creation, butsuch emphasis has a high likelihood of leading to negativeconsequences. The effects include forgetting the interest of customerand negative business practices among others (Hamel and Demand Media,2016). The corporate governance should emphasize on key elements likedirection, oversight, stakeholder relations, and corporatecitizenship (Kokemuller and Demand Media, 2016). These elementsensure that the company activities are run effectively andefficiently. However, all clients should be treated with the sameweight regardless of their size. Stewardship theory will work betterif the governance structure gives room for harmonization of someactivities like the CEO being the chairman of the board (Hamid,2011).
Blodget,H. (2012). Weneed to Stop Maximizing Profit, and Start Maximizing Valueretrieved fromhttp://www.businessinsider.com/lets-stop-maximizing-profit-and-start-maximizing-value-2012-12on March 16, 2016.
Hamel,G & Demand Media. (2016). Negativesof Maximizing Shareholder Valueretrieved fromhttp://smallbusiness.chron.com/negatives-maximizing-shareholder-value-36146.htmlon March 16, 2016.
Hamid,A.A. (2011). CorporateGovernance Theories-Stewardship Theoryretrieved fromhttp://ari-glcrc.blogspot.co.ke/2011/12/corporate-governance-theories_07.htmlon March 16, 2016.
Kokemuller,N & Demand Media. (2016). KeyElements of CorporateGovernanceretrieved fromhttp://smallbusiness.chron.com/key-elements-corporate-governance-57244.htmlon March 16, 2016.
Mauboussin,M.J. (2011). WhatShareholder Value is Really Aboutretrieved from https://hbr.org/2011/10/ceos-must-understand-what-creaon March 16, 2016.
Picker,L. (2016). TheEffect of Corporate Governance on Shareholder Valueretrieved from http://www.nber.org/digest/may11/w16574.html on March16, 2016.