Doctrine of Enlightened Self-interest as it applies to Stockholder Interest

Doctrine of Enlightened Self-interest as it applies to Stockholder Interest

A doctrine of Enlightened Self-interest as it applies to Stockholder Interest

The doctrine of enlightened self-interest requires a redefinition of stockholder interest. While businessman continues to recognize their obligations to ‘make a dollar for the owner’, they also recognize that business has broader responsibilities to develop the kind of society in which business can grow prosper and that is the long-range interest of stockholders to do so. The concept of social profit has been added to the requirements of economic profits. Therefore according to the doctrine of enlightened self-interest, it is the best interest of stockholders to use company funds for expenditures which will produce long-run social payouts even though short-run economic returns to stockholders may be diluted by so doing. Arguments for enlightened self-interest are not complicated-

(a) First, business is an integral part of society and depends upon that society to provide resources like labor; capital and customers.

(b) The second argument for self-interest is negative. If a business does not voluntarily accept responsibilities for social issues, the result will be the direct public pressure on business, government intervention in the business environment and both.

Shareholders are the ultimate owners as well as the significant members of the Company. People bearing one or more share of the company are being called by the shareholders or the stockholders. He must own shares of stock to qualify, but it doesn’t matter if they’ve purchased the stock or been given it as an incentive or part of their pay.

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