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Assignment for "Shareholder Wealth Maximization"
Finance & Accounting
Pages 4 (1004 words)
Assignment for "Shareholder Wealth Maximization" Table of Contents Table of Contents 2 Introduction 3 Shareholder Wealth Maximization 3 Goals and Objectives of the Management 4 Analysis and Recommendation 5 Conclusion 5 Reference 6 Bibliography 7 Introduction In this modern era of business there is a pressure on the private companies to stick to the rule of ethics and to give more priority to shareholders’ wealth maximization than the objective of profit maximization.
Shareholder Wealth Maximization The management of a company finds it tough when they are considering that what should be their goal- profit maximization of the company or the wealth maximization of the shareholders. The profit maximization objective can be pursued by the company management for the short term period. The company should has the objective to gain as much as profit by using the resources effectively and optimally. At the other side the company should take the long term objective of the stockholders’ wealth maximization. The stockholders of the company are interested for getting the returns for the long term as well as short term. The wealth maximization objective should be undertaken by the company management for the long term as it considers the following factors. The risk or uncertainty associated with the performance and the return associated with the company performance. The wealth of the company for the long term is analyzed as the company has to plan for providing the long term return. The timing of providing the returns is also considered (Shim and Siegel, p.2). If the company takes the long term objective then they can also fill their short their objective. ...
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