Stockholders or stakeholders? The role of Financial Communication

Abstract

ABSTRACT Capitalism is based on inequality: someone gains, another loses. However, this inequality is getting out of hand. According to Stockholder Capitalism, the predominant paradigm, the company is purely economic in nature. Management is only accountable to stockholders. Financial communication is directed mainly to financial target audiences. A relatively new theory, Stakeholder Capitalism, emphasises that Capitalism should function within an ethical context. Stakeholders' interests and information needs, including those of stockholders, should be taken into account. Therefore the role of Financial Communication is to help build and maintain mutually beneficial stakeholder relationships by facilitating informed financial decision making. An integrated approach to Financial Communication is proposed. It should be an interdisciplinary effort where the Accounting and Communication disciplines co-operate. Furthermore, it should be a two-way symmetrical communication process, within the context of Stakeholder Capitalism.