However, these days companies tend to be more socially responsible in order to attract more stockholders and gain public recognition. We can say it’s a new marketing tactic as well.
Stockholders are concerned of the fact that if the company they are investing in is socially responsible or not because if the company is socially irresponsible it can reduce the value of the stock. For example: The case of BP oil spill; It killed 11 people and expelled oil into water for 87 days. US judge district, Carl put most of the blame on the company BP for the 2010 Gulf of Mexico disaster.
In another incident, BP spent $2.1 billion to settle accident claims from Texas city refinery explosion 2005. So it is clear if the company is cautious in its actions and is socially responsible it will be away from big loses. Stockholders would invest more and would gain attention of potential stockholders as well.
Assets = Liabilities + Stockholder’s equity 🙂
When speaking of monetary units, I think accounting is the language and foundation of companies and what makes the department so useful is the use of monetary units. Monetary units show us one part of the triple bottom line, an accounting framework, that shows more than just the numerical value.
As a whole though, companies tend to sway more towards just seeing their profits surge and no one person is a bigger fan of that than stockholders; a bigger profit means bigger rewards.
Stockholders should turn their attention to the other portion of the triple bottom line framework. The triple bottom line, is profits, people and planet. When you look at a company’s social and environmental performances, this gives you an idea of their reputation. When you do for others and help out, your reputation will grow.
Having this growth will lead to more profits; because people will know the brand and the company and be more susceptible to buy their products. Becoming socially aware and environmentally cognitive will only benefit a stockholder, it will only reap more rewards, which means more money.
Companies provide the most useful information a stakeholder could need, the lifeline of the company, a financial statement. Within this you can determine how profits will be, from being extremely profitable to becoming a going concern. This will allow stakeholders or investors, to determine if they want to stay with the company or go.