Question

can you explain why shockholders wouldnt want detailed information about a company?

Answer 1

Definition of stockholder

An individual , group or organization that holds one or more shares in a company, and in whose name the share certificate is issued. Also called shareholder. In other words, the person who is the owner of the shares is called stockholder or shareholder and in return they gets their investment is called dividend.

Meaning of stockholder

A stockholder (also known as shareholder) is the owner of one or more shares of a company’s capital stock. A stockholder is considered to be separate from organization and as a result will have limited liability as far as company’s obligation.

These stockholder elect their representatives (commonly called as board of director) to take participate in company’s day to day activities.

As they are partial owner of the company have right to share in company’s profitability for as long as they own the shares. Division of profit is based on number shares owned by a shareholder and gains can be substantial to shareholder overtime.

Sharing in company’s profitability by stockholder is termed as dividend which company distribute their company’s profit among shareholders as per the ratio of share they held in the company over a period of time.

Conclusion

Hence stockholder wouldn’t want detailed information about company because 1. They elect their representative called BOD who look the company’s working.

2. Their share in the company’s capital is limited i.e. the share they held

3. Their liability to the company’s obligation is also limited

4. Their sharing in the company’s profit is limited to the share held in the company.

Therefore stockholder want only that information which related to their own interest i.e. information related to their dividend and their liability not a detailed information of the company like day to day working of the company, from where they purchase the material etc