Strengths and Weaknesses of Shareholder Wealth Maximization
Strengths and Weaknesses of Shareholder Wealth Maximization The maximization of shareholder wealth refers to the most wealth that can be brought to shareholders through the reasonable operation of finance.Scholars who hold this view believe that the purpose of shareholders to start businesses is to increase their wealth.They are the owners of the enterprise, the provider of corporate capital, and the value of its investment is that it can bring future rewards to the owner, including the acquisition of dividends and the sale of equity for cash.As a result, shareholder wealth maximization is also ultimately reflected in stock prices. I think, of course, there are somg obvious advantages to maximizing shareholder wealth. Firstly, shareholder wealth maximization to a certain extent can overcome the enterprise in the pursuit of profit on the short-term behavior, because not only the current profits will affect stock price, expected future profits to the enterprise also can produce im...