Question

As future Chief Financial Officer of a publicly listed company, what should be my PRIMARY and SECONDARY financial objective? Is it to maximize the wealth of our owners or corporate social responsibility?

Answer 1

Primary objective of the public listed company is the maximization of the overall wealth of the company and maximization of the overall stakeholders wealth and protection of interest of the stakeholders.Primary objective will also to incorporate corporate social responsibility which will be helpful in protection of interest of stakeholders

Secondary objectives of the company is related to all such short term objectives which are needed to achieve the the primary objective of the company.

Secondary objectives of the company can be profit maximization and adherence to the rules and regulations of the companies and following with the memorandum and articles of association.

Primary objective should not be the wealth of owners because maximization of owners wealth is highly concentrated concept and it is just related to maximization of shareholders benefit where as the primary motive should be always to maximize the interest of the various stakeholders in the organisation and protect the interest of the Other stakeholders including Shareholders.