Actions that maximise profit may not maximise shareholder wealth’. Explain the statement. Which of the two should be the goal of the company and its management?
Actions that maximize profit will not always be maximize the overall shareholders wealth,because actions of maximizing profits can sometimes be full of unethical methods and fraudulent practices which are involved like window dressing of books of accounts in order to inflate the books of accounts to present a rosy picture of the company and save the jobs of the management people.
Management should always be focused at wealth maximization rather than profit maximization because profit maximization is a narrow concept which is focused at short term objectives but wealth maximization of the shareholders is a long term perspective and it is focused at maximization of the wealth of the shareholders in the long run in the form of capital appreciation, when the company will be growing and expanding.
Goals of of companies management should always be maximization of the value of the company and protection of the interest of the stakeholders which will be helpful in long run sustainability of Organisation .
Actions that maximise profit may not maximise shareholder wealth’. Explain the statement. Which of the two...
If the goal of a for-profit company is to increase shareholder wealth, what is the goal of a non profit company?
The commonly accepted goal of for-profit organizations is to maximize shareholder wealth. Management might be faced with an ethical dilemma between profits and doing what is right for society. Do these for-profit organizations have a moral obligation to society? Why or why not? Be prepared to provide examples to support your position.
The commonly accepted goal of for-profit organizations is to maximize shareholder wealth. Management might be faced with an ethical dilemma between profits and doing what is right for society. Do these for-profit organizations have a moral obligation to society? Why or why not? Be prepared to provide examples to support your position.
Briefly explain using a graph whether given statement is true or false. ‘To maximise profit, a firm should produce the quantity where the difference between marginal revenue and marginal cost is the greatest. If a firm produces more than this quantity, then the profit made on each additional unit will be falling.’
Briefly explain using a graph whether given statement is true or false. ‘To maximise profit, a firm should produce the quantity where the difference between marginal revenue and marginal cost is the greatest. If a firm produces more than this quantity, then the profit made on each additional unit will be falling.’
How would each of the following actions be expected to affect shareholder wealth? a. Southern Company adopts fuel-switching technology at its largest power plants. b. Ford Motor Company pays $2.5 billion for Jaguar. c. General Motors offers large rebates to stimulate sales of its automobiles. d. Rising interest rates cause the required returns of shareholders to increase. e. Import restrictions are placed on the French competitors of Napa wineries. f. There is a sudden drop in the expected future rate...
Explain why the shareholder succeeded in defeating the actions of the company in Gambotto v WCP Ltd (1995) 182 CLR 432. Your answer must be supported by legal reasons.
The primary objective of the corporate management team is to maximize shareholder wealth. The company's board of directors and the shareholders evaluate and review managerial actions based on the growth in the value of the firm. Based on your understanding of what determines a firm's value, review the following: What does the value of a firm depend on? Option A The ability to generate cash flow that is available to distribute to the company's investors, including creditors and stockholders Option...
(b) Explain how far managerial incentive schemes based on share options and profit targets ensure that managers pursue the goal of maximising shareholder wealth. (5 marks)
If a company’s board of directors wants management to maximize shareholder wealth, should the CEO’s compensation be set as a fixed dollar amount, or should the compensation depend on how well the firm performs? If it is to be based on performance, how should performance be measured? Would it be easier to measure performance by the growth rate in reported profits or the growth rate in the stock’s intrinsic value? Which would be the better performance measure? Why? (250 words)