Question

Businesses often try to maximize their profit. Corporations often try to maximize shareholder value. When do you see "greed" as being ok and when is it not in our economy? For example, is sharehold's greed ok?

Answer 1

Shareholders greed is ok in the sense that it encourages greater economic activity, increased production of goods and services, increase in loans by the corporates, shareholders from the banks and financial institutions and increase in employment, demand for labor/workers, increase in consumption of goods and services and increase in investment demand and increase in salaries of managers and profits for shareholders and shareholders value, increase in share value of the companies, etc. So it encourages the economic growth and standard of living of the people.

When greed is not ok, if it artificially increases the value of the shares of the given company/firm and also when every decision is taken keeping in view of the shareholder's interests then same will increase the prices of the goods and services produced by that company and it will create artificial inflation for that category of goods and service which will decrease the purchasing power of that people and also it can put negative effect on the stock market since it can create the bubble which can burst at its peak and can crash the stock market and can make bankrupt many companies and people and can put negative effect on the economy of any country or even outside of that country and can become a financial crisis. This will slowdown the economy of the country for next few years and will increase the unemployment and will decrease the standard of living of people.