The objective is "Maximizing Shareholder Value is the sole responsibility of Corporate Management".

1 Discuss the pros and cons of this statement with the help of information from multiple sources. What is your opinion?

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Corporate management

Corporate management plays an essential role in the development of a company. Its responsibilities are leading, administrating, and directing a company to maximize a company's value. Then the business tasks of management are managing company resources and making a correct planning strategic. Therefore, the ultimate goal of corporate management is maximizing company's profits, while shareholders are an owner of shares in a company. However, some people may argue that management should carry some social responsibilities but not blindly pursuing the profits. According to the statement," Maximizing shareholder value is the sole responsibility of corporate management," there are many pros and cons. Although the corporate management is solely focusing on maximizing shareholder value can be pros to make a profitable company in the short term, it may also be cons to lose the society's trust to lose profits in the long term.

One of the pros of the statement, " Maximizing shareholder value is the sole responsibility of corporate management," is creating more and more benefits for the shareholders. In other words, the shareholders give the power to management in order to create more profits that return to all owners of their business. Regarding the article from Harvard Law Review "Corporate Powers as Powers in Trust," the author A. A. Berle, Jr. explains that "whenever a corporate power is exercised, its existence must be ascertained and the technical correctness of its use must be checked, but its use must also be judged in relation to the existing facts with a view toward discovering whether under all the circumstances the result fairly protects the interests of the shareholders." In this case, the purpose of all powers in the company is to maintain the shareholders' interests, so the management executes the company's power. For this reason, they should be responsible to use the power to maximum shareholders' value. Besides, in the article from Harvard Law Review "For Whom are Corporate Managers Trustees?" Dodd explains the responsibilities of corporate management that "no matter in the past, present, or possible future limitations, on the pursuit of stockholder profit in no way alter the theory that the sole function of directors and other corporate managers is to seek to obtain the maximum amount of profits for the stockholders as owners of the enterprise." Thus, Solely maximizing shareholder value is management's jobs that operates corporate power with planning strategic, so the management has to focus on the objective that creates maximum profits for the corporation and its shareholders.

One of the cons is corporate management that solely focuses on maximizing shareholder profits are generally objective but unemotional cause them to lack some social responsibilities such as improving the community. Consequently, the corporate social responsibility that is the obligation to serve the interests of society in addition to its owns interests. According to the textbook, Management, the author Schermerhorn demonstrates that the goal of businesses should focus on broader social welfare than their profits. By achieving this goal is giving back to society such as giving away a portion of a company's proceeds to charity, making environmental efforts and philanthropy to name a few. Companies will then appeal to socially conscious consumers and make a difference in the world, earning society's trust (Schermerhorn). In the same way, corporation profits come from customers in society. For this reason, another cons is if a company blindly seek the best benefits the short term in but ignore customer's trust, they may lose more profits in the long term. According to a daily business news, "What is Corporate Social Responsibility?," "Consumers consider more than quality goods and services when choosing a brand. Many are prioritizing corporate social responsibility (CSR), and holding corporations accountable for effecting social change with their business beliefs, practices and profits. In fact, some will even turn their back on their favorite companies if they believe they're not taking a stand for societal and environmental issues" (Caramela). Meanwhile, in the business article, the writer Raviv explains that In order to make best interests as their ultimate goal, some management and shareholder might try to expense on political, social, or environmental such as charitable events, then they can further gain more trust from a society to exchange more profits.(Raviv). Overall, corporate management should not solely maximizing shareholder but ignore the customer's trust from society.

In conclusion, the corporate management should be able to achieve their ultimate goal that is focusing on maximizing shareholder value, but they still need to giving back to the community to earn trust from customers and society to exchange more profits in the long term. In other words, if the corporate management can correctly execute their power to make a good balance between society's trust and shareholders value, they will more likely make the company better in the future.