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How does the goal of maximization of shareholder wealth deal with uncertainty and timing?

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Juvenal Dare

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Q: How does the goal of maximization of shareholder wealth deal with the problems?
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How does the goal of maximization of shareholder wealth deal with those problems?

How does the goal of maximization of shareholder wealth deal with uncertainty and timing?


What are some of the problems involved with the use of profit maximization as the goal of the firm How does the goal of maximization of shareholder wealth deal with those problems?

Problems involved with the use of profit maximization as the goal of the firm due to numbers of reasons. 1 It ignore the timing of return. 2 It ignores the timing of returns. 3 It ignores the risk.


What are the difference between the goals of profit maximization and maximization of shareholder wealth?

The diffence in laymen's terms is all within the focus. If one is maximizing shareholder value, they are simply placing focus on what can raise value in the "short term" (increase stock price). If one is maximizing company value, they are looking from a different point of view which is usually on what you can really sell the company for, intangibles such as reputation, products in the works, workplace, etc. A person would be looking towards the future "long-term" outlook with this perspective.


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