Shareholder Wealth Essay

Register to read the introduction… “The goal is in conformity with the best long-run interests of stakeholders and society in the long run” (Blackwellpublishing, 2009). Any financing or investment decision that improves the value of stakeholder’s stake in the business is acceptable. However, the managers must operate in the best interests of stockholders, not themselves, and do not attempt to expropriate wealth from lenders to benefit stockholders. “The managers are also expected to act in a socially responsible manner and do not create unreasonable costs to society in pursuit of stockholder wealth maximization” (tutor2u, 2009). Wealth maximization is achieved by maximization of the cash flows of the organization (Blackwellpublishing, 2009). Various objections against the profit maximization are:
1) Vague: Since there are multiple meanings of Profit it cannot be ultimate goal. For example profit after tax, retained earnings.
2) Uncertain: "Profit cannot be ascertained well in advance to express the …show more content…
This means that the firms should satisfy the objectives of customers, suppliers, government agencies, families of employees, special interest groups. (Tutor2u, 2009). This will also help the firms in achieving the success in the long run. Organizations should also consider non financial objectives to satisfy the other stakeholders of the organization. An organization should stress the importance of culture of ethical and societal responsibility. The organization should make commitment to a strong work ethic, integrity, honesty and quality, personal relations based on trust and mutual respect besides fostering a nurturing sense of quality and long-term achievement in the daily work beyond fashion and shortsighted gain. (Adapted from the website of