Question

Why do shareholders often not actively participate in the management of companies?

• A. They are too busy
• B. They lack the necessary skills
• C. Due to weak shareholder associations
• D. They are not interested in the company's performance

Answer 1

Answer:

C. Due to weak shareholder associations

• Lack of Influence: Individual shareholders typically own only a tiny fraction of a company. Because of their small stake, they often feel their vote or opinion has little impact on major corporate decisions.

• Limited Power of Associations: Even when shareholders form associations, they are often not powerful enough to effectively challenge management or influence corporate policy. This lack of collective power makes active participation seem futile.

• Misuse of Power: This general indifference and lack of organized opposition can be exploited by directors, who may then misuse their positions for personal gain.