The primary goal of financial management regarding corporations should be to maximize shareholder wealth on the whole. If management was to only concentrate on profit maximization, they would more than likely run their corporations into the ground. The very existence and concept of a corporation is beneficial to business in numerous ways. First and foremost, corporate status helps release management from possible enourmous financial liability issues. Second,
The book uses a good example when referring to mergers. A merger in the future of a corporation could be viewed as a positive move - bringing more wealth, more talent and/or a larger consumer base. However, management could see the move as a negative one as they would have to possibly change roles and give up certain privledges they are accustomed to.
Although the merger may bring the corporation positive growth, management could be reluctant to make the merge. This could be the case in a main goal of personal
It is important to note that
Also, social responsibility may play a part in the maximization of