Stockholder Wealth Maximization

Discuss the common goal of stockholder wealth maximation and the fix this lav have on a fiscal manager. Ultimately, it would seem that the financial managers goal should be the maximisation of profits which also ensures the stockholder wealth maximization. The more(prenominal) the trustworthys revenues and profits increase, the greater the dividends enjoyed by the stockholders. sidereal 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 areholder wealth maximization is defined as achieving the highest manageable value for the solid (Block, Hirt, Danielsen, 2009, p. 12). Additionally, the financial manager skunk non control nor call up the planetary houses stock price. The financial manager must(prenominal) be able to envision the best result that impart positively affect the stock price and encourage food commercialise co nfidence for long-term investment. Investor decisions must weigh the outlook involving determine 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 likeliness of the firms ability to continue to increase profitability.

This makes the financial managers decision-making task even more tortuous due to the fact that non all market factors are able to be predicted, much less predicted accurately (Block, Hirt, Danielsen, 2009, p. 13). afford maximization or wealth maximization refers to the amount of silver made by a firm (Wiki ! Answers, 2009). If a firm makes a large amount of profit 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 forget 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 destiny to get a full essay, order it on our website: BestEssayCheap.com

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