Question

Every finance textbook states that the goal of financial managers in a corporation is to maximize shareholder wealth because shareholders are the owners of the firm. Can you think of other goals a financial manager could/should have? Do these other goals also benefit shareholders?

Answer 1

Other goals of financial manager except maximisation of the shareholders wealth are-

A. Maximization of the profit is primary goal of the financial manager which will be leading into higher profits of the company and which will also be resulting into increase in share price if the market is efficient.

B. Maximisation of the survival capability of the business in adverse economic scenario in the long run and it will also help the shareholder because it will be helping in having a higher premium on shares

C. Maintaining of higher corporate governance so that there will be achievement of the goals and objectives in an efficient manner and it will be leading to translation into better Management which can lead to higher share price.

D. fulfillment of the ethical social responsibility of the business and protection of the interest of the Other stakeholders are also important apart from the shareholders for these financial managers and they will be trying to enhance the the ethical practice which will be leading to better brand building of the company and premium valuation

E. Maximization of the sales and size of the business in the long run and maximization of the core competitiveness of the business which can also lead to generation of of additional market capitalisation