Question

Explain by providing some examples. Do you think maximizing shareholders’ wealth also applies to Saudi Arabia?

Answer 1

Maximization of the shareholder wealth is also applicable to the companies in Saudi Arabia as it is the primary focus of the organisation who are operating in order to make a profit and they are trying to take all such stuff which will be helping the company in order to maximize its value and in turn, it will maximize the overall value of the shareholders in the long run so companies in Saudi Arabia like Saudi Aramco which has recently listed itself on the stock exchanges and is one of the largest Market capitalised company in the world is also trying to maximize the shareholders value as it has listed itself on the stock exchanges to help the shareholders increased its value because the company feels that its business is going to grow and its share price are also going to grow and it will help the shareholder in accumulating more wealth and overall making money through capital appreciation and dividend payment so listing of the company on the stock exchange is one of the example of Saudi Arabian company Saudi Aramco which will be representative of profit maximization philosophy and shareholders value maximization philosophy of the company in Saudi Arabia.

Saudi Aramco is one of the largest Oil producing company in the world and it accounts for almost 60% of the production of the oil in Saudi Arabia so it will be trying to maximize the interest of the stakeholders because when the company will be listed and the shares will be floated in the market, it will be that there will be a majority of the share holders who will be trying to acquire it through secondary market and those holders will also have the ownership of the company and when the company will be trying to maximize its operation and maximizes earning, it will be leading to appreciation in the share price and ultimately it will lead to maximization of the shareholders wealth so it can be summarised that shareholders value maximization in Saudi Arabia can be reflected through an example of operation of Saudi Aramco which is the largest Oil producer in Saudi Arabia.