“If I try to increase the market share of the company’s products, I am doing the...

“If I try to increase the market share of the company’s products, I am doing the best interest of my company’s shareholders” says Sarah, a fresh graduate who recently joined the finance team of a public listed company. Do you agree? Please explain. Financial managers are required to make important decisions for the best interest of the shareholders of the company. In your own words, please describe those decisions with examples.

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Expert Solution

Yes, I am agreeing to her statement because increasing the market share of the company will be leading to increase of the value of the company and increase of the organisational value will be leading to increase of the stakeholders value maximization, and the primary objective of a business is always maximisation of the organisational value.

Financial manager are required to make important decisions for best interest of the shareholders of the company because financial managers are always acting as agents of the shareholders and they should always be trying to act in the best interest of the shareholders. These financial managers are also to be synchronise their personal goals with the goals of the organisation so that there will be a maximization of the value of the organisation which is primary objective of any business, so they will be taking all such appropriate step in order to maximize the value of the organisation so that shareholders can be subsequently benefited by increasing their value of capital appreciation.

So, it can be said that the financial managers are always required to make important decisions for best interest of the shareholders as they are the ultimate authorities for making decisions in the business and they should always be trying to maximize the organisational value.

jeff jeffy answered 1 year ago

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