corporate stakeholder

Examples of corporate stakeholder in the following topics:

• Business Stakeholders: Internal and External

  • A stakeholder is an individual or group that has a legitimate interest in a company.
  • A corporate stakeholder is an individual or group who can affect or be affected by the actions of a business.
  • In discussing the decision-making process for institutions—including large business corporations, government agencies, and non-profit organizations -- the concept has been broadened to include everyone with an interest (or "stake") in what the entity does.
  • The picture shows the typical stakeholders of a company.
  • The stakeholders are divided in internal and external stakeholders.

• Uses of Financial Reports

  • Financial statements may be used by different stakeholders for a multitude of purposes
  • Corporate officers (the chief executive officer (CEO) and chief financial officer (CFO)) are personally liable for attesting that financial statements "do not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by the report. " Making or certifying misleading financial statements exposes the people involved to civil and criminal liability.

• The Role of Accounting in the Business

  • The role of accounting in business is to help internal and external stakeholders make better business decisions by providing them with financial information.
  • These people are all stakeholders in the business, which is to say they’re interested in its activities because they’re affected by them.
  • In fact, the purpose of accounting is to help stakeholders make better business decisions by providing them with financial information.
  • More importantly, accountants make sure that stakeholders understand the meaning of financial information, and they work with both individuals and organizations to help them use financial information to deal with business problems.

• Dividends Payable

  • Dividends are payments made by a corporation to its shareholders; the payment amount is reported as dividends payable on the balance sheet.
  • Dividends are the portion of corporate profits paid out to shareholders.
  • When a corporation earns a profit or surplus, that money can be put to two uses: it can either be re-invested in the business (called retained earnings), or it can be distributed to shareholders as dividends.
  • Many corporations retain a portion of their earnings and pay out the remaining earnings as a dividend.

• Ethical Considerations

  • Business ethics (also known as corporate ethics) is a form of applied ethics or professional ethics that examines ethical principles and moral or ethical problems that arise in a business environment.
  • Corporate entities are legally considered to be persons in the U.S. and in most nations.
  • The "corporate persons" are legally entitled to the rights and liabilities due to citizens as persons.
  • Related issues include corporate governance, corporate social entrepreneurship, political contributions, legal issues (such as the ethical debate over introducing a crime of corporate manslaughter) and the marketing of corporations' ethics policies.
  • Also, SOX increased the independence of the outside auditors who review the accuracy of corporate financial statements and increased the oversight role of boards of directors.

• Debt-to-Equity Ratio

  • Stakeholders, which include investors and lending institutions, provide companies with capital with an expectation that those companies generate net income through their respective operations.

• Reporting Equity Investments

  • An example of how to apply the equity method to a stock investment -- assume ABC Corporation purchases 30% of XYZ Corporation (or 80,000 shares) and can exercise significant influence.
  • DR - Investment in XYZ Corporation USD 80,000 (80,000 shares * USD 1 market price/share)
  • DR - Investment in XYZ Corporation USD 30,000 (100,000 net income * .30)

• Special Reporting

  • They are reported separately, and net of taxes, so that stakeholders can better predict future cash flows.

• Reporting Fair Value

  • The following is an example of how to report investments of less than 20% of shares -- assume ABC Corporation purchases 10% of XYZ's Corporation's common stock, or 50,000 shares.
  • The investment in XYZ Corporation is reported at cost in the asset section of the balance sheet.
  • Assume XYZ Corporation declares a dividend of USD 1 per share.
  • The investment in XYZ Corporation is reported at cost in the asset section of the balance sheet.
  • Assume XYZ Corporation declares a dividend of USD 1 per share.

• Reporting for a Combined Entity

  • The subsidiary can be a company, corporation, or limited liability company.
  • The following is an example of how to calculate consolidated net income -- assume ABC Corporation owns 80% of XYZ Corporation; the remaining 20% is a non-controlling ownership interest.