Explain why shareholder wealth as a singular, overarching goal is flawed.

Explain why shareholder wealth as a singular, overarching goal is flawed.

Expert Solution

There are other objectives which the company should focus as focusing only on shareholder wealth is not sustainable and not long term goal. The other objectives which company's should focus are
1. Focusing on stakeholders: Social responsibility of the company and focusing on stakeholders like the society, customers, environment,etc cab help in sustainable growth of the government. Moreover focusing on stakeholders helps build long term image and brand equity for the company.
2. Focusing on employee:Focusing on employees , their compensation and incentives would help in better quality products and service by employees. This will indirectly increase share holder wealth by focusing on the welfare of employees. A happy employee is important for growth of a company.
3. Social Responsibility objective: Focusing on environment , eco friendly and green products(products which are biodegradable and very less impact to environment) help a company gain positive image which helps in long term existence of a company.

Shareholder wealth maximization might be short term goal but all of the above are long term goals.

jeff jeffy answered 5 months ago

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