Stockholder Wealth Maximization

Discuss the common goal of stockholder wealthiness maximisation and the reach this lav have on a monetary manager. Ultimately, it would seem that the monetary managers goal should be the maximization of profits which also ensures the stockholder wealth maximization. The more(prenominal) the holds revenues and profits increase, the greater the dividends enjoyed by the stockholders. mean solar daylight to day decisions made by the financial manager solve revenues and impact the stockholders value both positively and negatively. According to Foundations of pecuniary Management, sh beholder wealth maximization is defined as achieving the highest manageable value for the fuddled (Block, Hirt, Danielsen, 2009, p. 12). Additionally, the financial manager endure non control nor call up the homes stock price. The financial manager must(prenominal) be able to envision the best result that impart positively affect the stock price and encourage food food market confid ence for long-term investment. Investor decisions must weigh the outlook involving pause and return. The greater the risk involved, generally the greater return that can be achieved. By judging the financial managers decisions for long-term investment, a stockholder is able to ascertain the likelihood of the firms ability to continue to increase profitability.

This makes the financial managers decision-making task even more convoluted due to the fact that not all market factors are able to be predicted, much less predicted accurately (Block, Hirt, Danielsen, 2009, p. 13). sacrifice maximization or wealth maximization refers to the amount of property made by a firm (Wiki Answers, 2009). If a firm makes a large amount of pro! fit yet does not do so in an efficient manner, the wealth maximization is not met and the shareholder wealth is not maximized because the market provide be able to witness the inefficiency (Block, Hirt, Danielsen, 2009, p. 12). References Block, Stanley B., Hirt, Geoffrey A., & Danielsen, Bartley R. (2009). Foundations of financial management (13th...If you fatality to get a full essay, order it on our website: OrderEssay.net

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