What is meant by the goal of maximization of shareholder wealth?

Suppose a stock holder buys a stock at $10 and in ten years time the market price of stock shoots up to $55.
This is called maximizing shareholders capital.

From Barry D.
Maximizing Sharholder Wealth refers to the process by which executives in a pulically-owned company, usually, (but also to private companies with shareholders), undertake investing in new projects, maximizing profits from existing products and services, controlling costs, and adding "value" to the company through the process, which hopefully gets reflected in the price of the stock, but alwasy in the increase in Net Asset Value and Equity Per Share.
Sometimes simply selling the company for a premium over the existing price or Asset Value results in Maximizing ShareholderWealth.
Hope this helps,
+ 12 others found this useful
Thanks for the feedback!

What is the concept of maximization of shareholder wealth Why is wealth maximization better than profit maximization Wealth maximization?

The concept of maximizing share holder wealth is a goal that encompasses everything that is expected out of a management. when would share holder wealth increase? Either b (MORE)

What is meant by wealth maximization?

  That means maximizing the net present value of the wealth of the shareholders.   For Example in taking an investing decision management should choose that project f (MORE)

Maximizing shareholder wealth means maximizing the firms what?

  when companies maximized shareholder stocks, it only shows that the company is in progress and supports a positive environment to people/employees who works in finance,m (MORE)

Do non profitable projects contradict the goal of profit maximization of shareholder wealth?

Although it may appear as a bad idea to invest in non-profitable projects (e.g. those with a negative net present value), companies often invest in them nonetheless as a strat (MORE)

Who Are S Corp Shareholders?

Many small businesses find it beneficial to apply for S Corporation status for the purpose of filing federal taxes. Most business entities are able to become an S Corporation (MORE)
In Degrees

Colleges Offering Wealth Management Programs

It takes great skill to manage and grow wealth. Without the knowledge of how to manage it, you lose potential investment opportunities. Whether you want to manage your own wea (MORE)

General Wise Approaches to Wealth Management in Terms of Tax

An important part in wealth management is effective tax planning. Both the market and legislation are subjected to fluctuations that can affect you assets considerably. Being (MORE)

The $1 Million Investment Portfolio: Why Most People Will Never Hit This Goal

Reaching the $1 million mark in net worth is the dream of many Americans searching for financial security and a comfortable retirement. Although a million dollars is probably (MORE)

What is shareholder wealth maximization model?

Shareholder Wealth Maximization Model, unlike simple profit-maximization incorporates the time dimension and risk. The Shareholder-Wealth Maximization model (SWM) goal states (MORE)

Is the shareholder wealth maximization goal a short-or long-term goal?

It's supposed to be a long term goal; but in the current markets short-term prices can raise stock values and get manager bonuses so they may bet tempted to go for more short (MORE)