Shareholder Wealth Maximisation - Essay Example

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Shareholder Wealth Maximisation

These decisions can be related to investment as well as finance decision. The pursuit of such goals is sometimes not free from critics. Therefore the aim of this theoretical research is based on the critical evaluation of the shareholder wealth maximisation axiom.
As we enter the 21st century, calling it the postindustrial era or postmodern era, the moral status of the shareholder wealth maximisation for the corporate activity has changed. Shareholder wealth maximisation is exempt for moral scrutiny, within the disciplines of financial economics and corporate culture. This concept is undeniably protected against the critics by the theory of invisible hand that each individual company that competes in pursuit of shareholder wealth maximisation ultimately leads to maximum cumulative economic advantage.
"Many managers have considerable discretion to substitute their own interest for that of the stockholders. Stockholder and manager interests can conflict or be independent in significant respects. The extent to which firms are managed in stockholder interests vary considerably" (Findlay & Whitmore, 1974). ...Show more

Summary

'Maximise' as everyone knows means to gain the highest achievable number for something. Although originally used for mathematical programming, it is now widely used in a broader sense. The next word 'shareholder' includes owners, stockholders and the other principals of the organization which are a common and readily understood terminology…
Author : gblick
Shareholder Wealth Maximisation Essay essay example
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