Why is maximizing shareholders wealth the best objective for a firm?

Fantastic news! We've Found the answer you've been seeking!

Question:

Why is maximizing shareholders’ wealth the “best” objective for a firm?

Related Book For answer-question

Foundations of Financial Management

ISBN: 978-1259265921

11th canadian edition

Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta

See More Books

Posted Date: Jun 02, 2022 06:36 AM

See More Questions

Why is the goal of maximizing owners wealth helpful in analyzing capital investment decisions? What other goals should also be considered?
Is there a conflict between maximizing shareholder wealth and never paying bribes when doing business abroad? If so, how might you explain the firms position to shareholders asking why the company...
Why do maximizing EPS and maximizing value not necessarily lead to the same conclusion about the optimal capital structure?
Pam has a $25,900 basis (including her share of debt) in her 50 percent partnership interest in the Meddoc Partnership before receiving any distributions. This year Meddoc makes a current...
Shown below are selected financial data for THIS Star, Inc., and THAT Star, Inc., at the end of the current year: Assume that the year-end balances shown for accounts receivable and for inventory...
What is the fundamental difference between an organic substance and an inorganic substance? Write chemical formulas of three inorganic molecules that contain carbon.
When to file a motion to strike?
Computing the payback period and unadjusted rate of return for the same investment opportunity Foy Rentals can purchase a van that costs $60,000; it has an expected useful life of three years and no...
Analyse organisational politics in terms of the following : Why they arise and exist;the consequences on organizations and the effective management thereof. Support your analysis with examples from...
In early 2016, Doc and Lyn McGee formed the McGee Cake Company. The company produced a full line of cakes, and its specialties included chess cake,* lemon pound cake, and double-iced, double...
Amount of annuity is 42000 Interest rate is 5% Period (7 years) a. Calculate the present value of the annuity assuming that it is (1) An ordinary annuity. (2) An annuity due.
S dx Evaluate ( +1) x(x+1)
Issue(s): Whether a person whose property is taken without compensation may seek redress under the self-executing takings clause of the Fifth Amendment even if the legislature has not affirmatively...
Suppose your lab partner has a height L = 173 cm and a weight w = 719 N. You can determine the position of his centre of gravity by having him stretch out on a uniform board supported at one end by a...
Sabrina's utility from consuming cookies (C) and milk (M) is described by the following information: Utility function = 2CM Marginal utility of cookies (MUC) = 2M Marginal utility of milk (MUM) =...
Explain 2 type of regression analysis situation regulation analysis & example a) linear analysis b) multiple analysis
How do Singapore Airlines in the current market approach and optimize their segmentation, targeting, and positioning strategies, considering the diverse needs and preferences of consumers, and how...
XYZ Inc. a calendar year, accrual basis corporation, had the following items during 2021: Gross revenue from operations Cost of goods sold $420,000 ($180,000) $9,000 LT capital gain .LT capital...
Louisa and Bart are twins, aged 20. Advanced for their age in some respects, they were both working and also planning their financial future. Both felt they could conunit $5,000 per year for their...
Radio Gaga can issue preferred shares at $25 with an annual dividend of$1.50. Flotation expenses of a new issue will be 5 percent. What is the cost of a preferred share issue?
Mr. John Hailey has $1,000 to invest in the market. He is considering buying 50 shares of the Comet Airlines at $20 per share. His broker suggests that he may wish to consider purchasing warrants...
The Chinese Motor Company The Chinese Motor Company runs a UK branch and a China branch. Both branches run three departments for sales, car servicing and the sale of parts. Advise the management of...
The Depreciation Company The directors of the Depreciation Company are deciding on their accounting policy on the depreciation of their non-current assets. They have just purchased some new assets...
Profit figures are wanted by so many different groups of people for so many different purposes that it is not possible to define and measure profits in such a way as to meet all of those different...

Why is maximizing shareholders wealth the best objective for a firm?

Question:

Expert Answer:

In modern finance it has been demonstrated that maximizing shareholder wealth is the superior goal of a firm and shareholders are the residual claimants thus maximizing shareholder returns usually ind... View the full answer

Foundations of Financial Management

Students also viewed these finance questions