What does it mean when shareholder expectations are described as 'legitimate'?

When shareholder expectations are described as 'legitimate,' it indicates that these expectations are grounded in the company's historical conduct and practices. This means that shareholders anticipate that the company will continue to operate in a manner consistent with how it has behaved in the past, including adherence to established policies, practices, and norms.

Legitimate expectations are often derived from prior dealings, public statements, and other behaviors that signal to shareholders what they can reasonably expect from the company going forward. This aspect of legitimacy acknowledges the trust and reliance that shareholders place on the company's history and established conduct, which ultimately contributes to their investment decisions and their overall relationship with the company.

While the other options touch on various aspects of expectations, they do not capture the essence of 'legitimate' in the context of shareholder expectations. Subjectivity can play a role in expectations, but legitimate expectations are more about grounding them in the company's prior actions. Disclosure is an essential part of corporate governance, but not all legitimate expectations require formal disclosure. Furthermore, while legal guarantees exist for certain rights and protections, legitimate expectations themselves are not assured by law, but rather by the patterns of conduct established by the company.