SHARES AND ABSTRACT
All key notes about shares and shareholders and
the different types of businesses.
SHAREHOLDERS Evie Pass
Business
AND TYPES OF
BUSINESS
Revision
, Shares and Shareholders
Influences on share price:
1. Global economy
2. National economy
3. Investor confidence
4. Company performance
5. Political stability
The role of shareholders and why they exist:
Shareholders are:
investors who are part owners of a company
their liability is limited to the amount invested or promised
they receive dividends in return for their investment
Invited to an AGM where they have a proportional voting right
Why invest?
Short term gains i.e. receipt of dividends
Long term gains i.e. increase in share price
The significance of share price changes:
Indicative of managers’ performance
Influences stakeholders, including consumers, suppliers and employees,
perceptions of business performance
Can affect ability to raise finance from other sources
Will be watched carefully by competitors and other businesses – may flag an
opportunity for a hostile takeover
Affects consumer confidence in the economy as a whole
The effects of ownership on mission, objectives, decisions and performance:
Mission and objectives
The main aim or objectives will vary depending on business form, for example; a
sole trader might sacrifice higher profits in order to maintain work/life balance,
whereas a Plc may have pressure to maximise shareholders’ returns
A non-profit organisation will be focused on achieving social goals over financial
ones
Decisions
A sole trader doesn’t have to consult with others so can make decisions quickly
and autonomously
A Ltd may be able to quickly consult shareholders as they are known to the
business, however a Plc may have to call a meeting and go through stages before
a decision can be reached
A non-profit organisation may have to consult many members who may be
difficult to coordinate
Performance
A sole trader will judge themselves on performance but will not be scrutinised by
the public in the same way as a Plc. may be
Ownership will affect the ability to employ specialist staff, access to finance,
ability to maintain a competitive advantage and embrace new technology. All of
these will influence business performance
All key notes about shares and shareholders and
the different types of businesses.
SHAREHOLDERS Evie Pass
Business
AND TYPES OF
BUSINESS
Revision
, Shares and Shareholders
Influences on share price:
1. Global economy
2. National economy
3. Investor confidence
4. Company performance
5. Political stability
The role of shareholders and why they exist:
Shareholders are:
investors who are part owners of a company
their liability is limited to the amount invested or promised
they receive dividends in return for their investment
Invited to an AGM where they have a proportional voting right
Why invest?
Short term gains i.e. receipt of dividends
Long term gains i.e. increase in share price
The significance of share price changes:
Indicative of managers’ performance
Influences stakeholders, including consumers, suppliers and employees,
perceptions of business performance
Can affect ability to raise finance from other sources
Will be watched carefully by competitors and other businesses – may flag an
opportunity for a hostile takeover
Affects consumer confidence in the economy as a whole
The effects of ownership on mission, objectives, decisions and performance:
Mission and objectives
The main aim or objectives will vary depending on business form, for example; a
sole trader might sacrifice higher profits in order to maintain work/life balance,
whereas a Plc may have pressure to maximise shareholders’ returns
A non-profit organisation will be focused on achieving social goals over financial
ones
Decisions
A sole trader doesn’t have to consult with others so can make decisions quickly
and autonomously
A Ltd may be able to quickly consult shareholders as they are known to the
business, however a Plc may have to call a meeting and go through stages before
a decision can be reached
A non-profit organisation may have to consult many members who may be
difficult to coordinate
Performance
A sole trader will judge themselves on performance but will not be scrutinised by
the public in the same way as a Plc. may be
Ownership will affect the ability to employ specialist staff, access to finance,
ability to maintain a competitive advantage and embrace new technology. All of
these will influence business performance
