Stockholder Theory

Stockholder Theory is the idea that a company's primary goal is to maximize the value for its shareholders, the owners who invest money in the business. It emphasizes that the company's main responsibility is to generate profits and increase stock prices, benefiting those who own shares. While the company may consider other stakeholders like employees or community, its primary duty is to serve the interests of its shareholders, ensuring their investment grows. This approach focuses on financial performance as the key measure of success.