Updated July 24, 2023
Difference Between Shareholder vs Stakeholder
Shareholder vs Stakeholder in this, Shareholders are the owners of equity shares in an organization. A shareholder can be an individual, entity, or organization that owns equity shares in another entity. Shareholders can be of two types – equity shareholders and preference shareholders. An equity shareholder is the owner of the equity shares in an organization, while a preference shareholder is the owner of preference shares in an organization. An equity holder has the right to vote on various matters of a company, and he or she is entitled to receive dividends if at all that company makes sufficient profits and achieves its organizational goals during a given period of time. On the other hand, stakeholders can be defined as a term used to represent various types of investors of an organization.
A stakeholder can be an individual, group, or organization having an underlying interest or concern in an organization’s business operations. The business operations, policies, and objectives of an organization can affect or be affected by the same stakeholders. Directors, creditors, government institutions, and their agencies, employees, shareholders, debenture holders, suppliers, customers, competitors, vendors, etc., all are fine examples of key stakeholders. In this context, it can be appropriate to say that all shareholders are stakeholders, but all stakeholders are not shareholders. Also, in a broader sense, it can be said that the stakeholders can be regarded as the parties that trade with an organization, and they cannot be termed as the owners of the same unless they are not the shareholders of that organization.
Head To Head Comparison Between Shareholder vs Stakeholder (Infographics)
Below are the Top 10 differences between Shareholder vs Stakeholder:
Key Differences Between Shareholder vs Stakeholder
The key differences between shareholders and stakeholders are provided and discussed as follows:
- Shareholders are more concerned about increasing owners’ wealth, whereas stakeholders focus on enhancing the goodwill of the company.
- Shareholders can be of two types- equity shareholders and preferential shareholders. On the other hand, stakeholders can be of two types- internal stakeholders and external stakeholders. Internal stakeholders can be further classified into shareholders, managers, employees, directors, and trade unions, whereas External stakeholders can be classified into suppliers, creditors, government institutions and their agencies, society, customers, competitors, advisors, consultants, suppliers, vendors, etc.
- Shareholders are regarded as the owners of the company, whereas stakeholders are the parties that are directly or indirectly have an interest in the operations of a company.
- Shareholders focus highly on Return on Investment (ROI), whereas Stakeholders focus on an entity’s financial well-being.
- An entity that is limited by shares can have shareholders. On the other hand, stakeholders are required in each company irrespective of its size and other factors.
- Shareholders are a type of stockholders. Therefore, it is true to say that all shareholders are stockholders while all stockholders are not shareholders.
- Shareholders are more concerned about the short-term success of an entity, whereas stockholders focus on an entity’s long-term success.
- The financial performance of an organization has a direct impact on its shareholders, whereas the same might have a direct or indirect impact on its stakeholders.
Comparison Table Between Shareholder vs Stakeholder
Let’s discuss the comparison between Shareholder vs Stakeholder:
| Basis of comparison | Shareholders | Stakeholders |
| Ownership Status | Shareholders are the owners of an organization. | Stakeholders cannot be regarded as the owners of an organization as they act as interested parties of the same. Or in other words, stakeholders are the parties that have a direct or indirect interest in the company. |
| Viewpoints | From a Shareholder’s point of view, the company’s employees must carry out business operations in a manner that drives profits and have a positive impact on the stock prices of the same so that the amount of dividends available for distribution is maximized. The shareholders would also want the company to focus more and more on mergers, expansions, and acquisitions so that there is an overall increment in the financial wellbeing of the same, which would ultimately mean the announcement of the higher amount as dividends to shareholders. | From the Stakeholder’s point of view, the company must focus more on longevity and ensure that it is providing quality products and services. |
| Impact | Shareholders are directly impacted by the financial performance of an entity. | Stakeholders can be directly or indirectly impacted by whatever takes place in an entity. |
| Comprises of | A shareholder can be of two types:
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A stakeholder can be of two types:
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| Focuses on | Shareholders are more focused upon ROI or return on investment | Stakeholders are more focused on the financial performance of an organization. |
| What are they? | Subset | Superset |
| Entity | Shareholders can only associate with entities that are limited by shares. | Stakeholders are the interested parties or, in other words, the parties that trade or deal with an organization. This is why every company has stakeholders. In fact, a company cannot survive in the absence of stakeholders, no matter what the size of the former is. |
| Aims at | Shareholders aim at-
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Stakeholders aim at-
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| Measurement of Success | The measurement of success is confirmed by value enhancement. | The measurement of success is confirmed by the satisfaction of all the stakeholders. |
| Dimension | Single dimension | Multi-dimensional |
Conclusion
Shareholders can be defined as an individual, group, or company that is levied with the ownership status of an organization for purchasing the shares of the same. On the other hand, stockholders can be defined as an individual, group, or company that is regarded as interested parties to an organization for having a direct or indirect interest in the business operations and functioning. In the absence of stockholders, a company may cease to exist, while the same may or may not happen in the absence of shareholders.
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