Question

The purpose of the financial management is to maximize shareholders wealth. What is the meaning of shareholders wealth maximization? If a company attempts to maximize its shareholders wealth, is this good or bad for society? Explain by providing some examples. Do you think maximizing shareholders’ wealth also applies in Saudi Arabia?

Search the SEU library or the Internet for an academic or industry-related article. Select an article that relates to these concepts and explain how it relates to doing business in Saudi Arabia.

For your discussion post, your first step is to summarize the article in two paragraphs, describing what you think are the most important points made by the authors (remember to use citations where appropriate). For the second step, include the reference listing with a hyperlink to the article. Do not copy the article into your post and limit your summary to two paragraphs. Let your instructor know if you have any questions and enjoy your search.

Answer 1

shareholders wealth maximization will be related to maximization of the capital appreciation of the shareholders and it will be related distribution of the dividend of the shareholders of total capital of the shareholder will be maximized through market capital maximization and Dividend distribution and hence it should be leading to maximisation of shareholders wealth.

when the company will be trying to maximize the shareholder wealth it would not be looking for betterment of the society because it will be looking for generation of higher profits and taking all such measures which are in the best interest of shareholders and they will be trying to maximize his wealth rather than the betterment of the society because shareholders will be not ready to to consider the interest of other stakeholders and they will be treating their interest as primary interest.

When the company will be trying to accept a project with such supplier who is engaged into unethical project making but he is beneficial for the company,the company's proceeding with such project then it will maximize the value of the shareholder but it would be leading to damaging the interest of the society.

YES, the concept of shareholders wealth maximization exists in Saudi Arabia also in which we can easily see the Saudi Aramco which has been engaged in to all such lowering and increasing the price of in interest of the shareholders wealth maximization.