Corporate Finance Overview along with the issues of Firm's goal - profit maximization vs. wealth maximization...

Corporate Finance Overview along with the issues of Firm's goal - profit maximization vs. wealth maximization and Agency issue.

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Corporate finance is the division of finance that deals with the funding of a corporation, capital structuring, and investment decisions to maximize profits and thereby shareholder value.

The objectives of corporate finance are Profit Maximization and Wealth Maximization. There are arguments regarding which of these objectives should be treated as primary one. Traditionally recommended objective of any business organisation is profit maximization. It is treated as the measure of efficiency. But wealth maximization aims at increasing the market value of the common stock of the company over time.

Another issue in corporate finance is the agency issue. Principal is the owners of the company and agents are the managers. Agency issue arises when the agents act on their own interest rather on principal’s. Shareholders want managers to work for their interest that is for the achievement of company objectives. But managers sometimes try to increase their own wealth and then arises agency issue between the owners and managers.

jeff jeffy answered 1 year ago

The primary goal of finance in corporate organizations is the maximization of shareholders’ wealth.

The primary goal of finance in corporate organizations is the maximization of shareholders’ wealth. Using the balance sheet model of the firm, demonstrate how this goal can be achieved.

Why is the goal of wealth maximization is superior than the goal of profit maximization. Also...

Why is the goal of wealth maximization is superior than the goal of profit maximization. Also explain why profit maximization is a short run goal and wealth maximization is long run goal. please explain in detail.

Is "profit maximization" consistent with "shareholder-wealth maximization"?

The goal of "maximization of the shareholders' wealth" is an adequate goal for a project. Do...

The goal of "maximization of the shareholders' wealth" is an adequate goal for a project. Do you agree? If you dont explain your justtification (please explain in detail)

The goal of “maximization of the shareholders’ wealth” is an adequate goal for a project. Do...

The goal of “maximization of the shareholders’ wealth” is an adequate goal for a project. Do you agree? If you don’t, explain your justification. Can you comment on this topic at least 5 pages on MS Word? Thanks.

Profit Maximization. The primary goal of most businesses is profit maximization. Discuss the concept of profit...

Profit Maximization. The primary goal of most businesses is profit maximization. Discuss the concept of profit maximization. How can it be reconciled with corporate social responsibility? Can profit maximization promote social welfare?

why profit maximization is an inappropriate goal

In finance theory, the goal of the firm is said to be “maximize wealth” instead of “maximize profit.”

In finance theory, the goal of the firm is said to be “maximize wealth” instead of “maximize profit.” Define shareholder wealth. How would one measure shareholder wealth? Briefly discuss two limitations of “profit maximization” as a goal for the firm.

The Stakeholder Capitalism or Corporate Wealth Maximization Model

The Stakeholder Capitalism or Corporate Wealth Maximization Model A) clearly places shareholders as the primary stakeholder. B) combines the interests and inputs of shareholders, creditors, management, employees, and society. C) has financial profit as its goal and is often termed impatient capital. D) is the Anglo-American model of corporate governance. E) none of these

Why is wealth maximization used as the goal for financial decisions?

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