Stakeholder Theory
Under the stakeholder, a company operates towards meeting the interests of the stakeholders. The stakeholders of a company are viewed as the individuals who, in one way or another, are affected by decisions and operations of the said firm. The managers of a firm are tasked with the responsibility to meet the stakeholder managerial requirements (Harrison, Freeman & Abreu, 2015). The managerial perspective of the stakeholder theory is based on two dimensions: the management of stakeholder benefits and respect for stakeholder participation in decision making, and acting as the stakeholder’s agent in ensuring the long term stakes of the different stakeholder groups.
A company that operates under the stakeholder theory has to involve the interests of every stakeholder in all the decisions made. The reporting of financial profits should take into consideration the views of each stakeholder. The Australian firm will be giving misleading information because the interests of environmentalists are not represented in the report. The firm should report the measures that have been in practice to address the concerns that could be raised by environmentalists due to the emission of toxic substances into the air (Tantalo, 2016). Environmentalists are not the only ignored group in this case; the neighbors also need to be briefed concerning the state of pollution and whether the company has put any recommendable efforts.
The evidence obtained from one research cannot be taken directly to invalidate the evidence from earlier research. Analyses on efficient markets tend to be affected by the high volatility affecting capital markets (Atanasov, 2018). The conclusions from two types of research can only be compared under constant volatility factors. The evidence from research showing that capital markets do not behave according to efficient market theory therefore cannot be used to invalidate the claim that capital markets are efficient. Other factors affecting the research conclusions should be reconciled before any validation or invalidation is made.