ABSTRACT
Principle 2 states that Shareholders do not own the firm. In reality, nobody owns a firm – it cannot be owned. In addition, executives and directors do not have a fiduciary responsibility to manage the firm primarily in the interests of shareholders. Legally, the corporation is an independent entity (a legal person) with contractual interests. Philosophically, it is the collective effort of the actions and interests of multiple parties, all of whom have a stake in the value creation process. An important step managers can make to reinforce this reality is to resist pressures for short-term performance and, instead, make decisions that are in the medium- to long-term interests of the organization, and all of its stakeholders.
