GNcareers, from Gulf News

Stock, stake and shareholders

Business termsImage Credit: Supplied

Often used by accountants, the terms “stockholder,” “shareholder” and “stakeholder” can refer to individuals or companies, or even both. Often used interchangeably, they actually have, upon closer inspection, slightly different meanings.

A stockholder or shareholder is any individual that has a “stock” in a company. Because the type of stock is not specified, it can be anything from physical inventory to shares, or even any other kinds of vested interests.

Stakeholders, on the other hand, refers to persons who have a “stake” in a company. They could be the investors, employees, customers or suppliers who prioritize fair trading practices to maximize profits and enhance shareholder value. Costs are a critical input in a company and they seek to keep these under tight control.

All firms, whether publicly traded or not, have stakeholders, but only publicly traded firms have shareholders. While both shareholders and stockholders are stakeholders, not all stakeholders are shareholders or stockholders. What is the relationship between the firm and its stock, share and stakeholders? They are all paid dividends. While shareholders are paid cash dividends, a stakeholder’s dividends may be more abstract.

Stockholders, stakeholders and shareholders are all affected, directly or indirectly, by company performance, managerial decisions, other firms’ performance, and even global factors like oil prices and weather.

Handy Hints
• Stock, share and stakeholders are paid dividends
• Only publicly traded companies have shareholders
• Stakeholders can be employees or the community

Source: Bushra Hameduddin, Special to Classifieds
The writer is a freelancer