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What does shareholder wealth maximization mean?

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βˆ™ 2014-09-17 17:46:35

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Shareholder wealth maximization is achieving the highest possible wealth for a company's shareholders. This is done by achieving the highest possible value for the company in the marketplace.

2014-09-17 17:46:35
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Related Questions

What is the difference between profit maximization and maximization of shareholder wealth?

Shareholder wealth (more commonly referred to as shareholder


Is shareholder wealth maximization the right objective for a company?

Yes, shareholder wealth maximization is a great approach for businesses. With a focus on shareholder wealth the business can grow.


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?


Shareholder wealth maximization is considered to be a more appropriate goal for the firm than profit maximization because?

Shareholder wealth maximization is considered to be a more appropriate goal for the firm than profit maximization


Outline how an agency problem can interfere with the implementation of the goal of shareholder wealth of maximization?

Outline how an agency problem can interfere with the implementation of the goal of shareholder wealth of maximization


Which is more comprehensive objective profit maximization or shareholder wealth maximization?

If the company is public listed (trades in the stock market) their aim is shareholder wealth maximization whereas for a privately owned firm a profit maximization objective is appropriate.


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

The goal of maximization of shareholder wealth is meant by; first, in most cases


Maximization of shareholder wealth as a goal is superior to profit maximization because?

it is operating cost


Maximization of shareholder wealth?

increase the company's net worth


What is the difference between maximizing firm value and maximizing shareholders wealth?

the difference between firm value maximization and shareholder wealth maximization?


What is the new foreign competitors shareholder wealth-maximization of a firm?

COB


Can there be difference between profit maximization and shareholders wealth maximization?

the difference between profit maximization and shareholders wealth maximization is that profit maximization is concern with profit that a company received based on inflow and outflow within a period while shareholders wealth maximization is concern with dividend and capital gain that shareholder received on a return of his/her investment.


What is the difference between wealth and profit maximization?

Shareholder wealth (more commonly referred to as shareholder value) is talking about the value of the company generally expressed in the value of the stock. Profit maximization refers to how much dollar profit the company makes.


What is the agency problem and how might it impact the goal of maximization of shareholder wealth?

The agency problem is a result of the separation between the decision makers and the owners of the firm. As a result managers may make decisions that are not in line with the goal of maximization of shareholder wealth.


Would management pursue goals other than shareholder wealth maximization?

Of course yes, but maximizing shareholder wealth would be the primary goal of any organization that has shareholders.


The advantages and disadvantages of shareholder wealth maximisation?

One advantage to shareholder wealth maximization is that the fact that the business draws more investors and raises more capital. A drawback is the fact that the money could be reinvested in the company instead of maximizing shareholder wealth.


Explain the rationale for selecting shareholders wealth maximizatio as the objective of the firm?

Explain the rationare for selecting shareholder wealth maximization as the objective of the firm.Include a consideration of profit maximization as an alternative goal


What is the main objective of a firm in economics?

Profit maximization. Also called maximizing shareholder wealth.


What is the difference between shareholder wealth maximisation and stakeholder wealth maximisation?

Shareholder and stakeholder in a company are the investors and company assets holder respectively. So the wealth maximization in both cases is nothing but increase in the share value for shareholder and company profitability for stakeholder.


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 that the objective of a firms management should be to maximize the present value of the expected future cash flows to equity owners (shareholders).Consider cash flows to be the same as profits. Hence, the value of a firms stock is equal to the present value of all expected future profits, discounted at the the shareholders required rate of return.


Why is shareholder wealth maximization a more appropriate goal than profit maximization?

Wealth maximization: To stay invested and multiply your invested money. The term is used for long-term investors. Short-term investors work for profit maximization. They sell their shares, as and when they get profit from the market.


Why is adjusting the WACC upwards consistent with the overall corporate goal of shareholder wealth maximization?

why? isn't it to adjust it downwards to max. shareholders wealth?


What is the Shareholder wealth definition?

Shareholder wealth is defined as the present value of the expected future returns to the owners (that is, shareholders) of the firm. These returns can take the form of periodic dividend payments and/or proceeds from the sale of the stock. Sharered by the market value (that is, the price that the stock trades in the marketplace) of the firm's common stock. Profit maximization typically is defined as a more static concept than shareholder wealth maximization.


What is shareholder wealth maximization principle?

Shareholder wealth maximization (or simply, "maximization") is a comprehensive, long term financial goal reflecting investor confidence, measured specifically in the face value of a corporation's stock (Block & Hirt, 2002).Block, S. B., & Hirt, G. A. (2002). Foundations of Financial Management (10th ed.). Boston: McGraw-Hill


Explain why management may tend to pursue goals other than shareholder wealth maximization?

The management may pursue goals other than wealth maximization in order to stay competitive and expand. The company may temporarily stop chasing shareholder wealth maximization in order to make their future benefits secure. That happens by diverting dividends or profits to upgrading systems, reinvesting in new technology and doing research.