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Why is adjusting the WACC upwards consistent with the overall corporate goal of shareholder wealth maximization?
Wiki User
∙ 12y ago
why? isn't it to adjust it downwards to max. shareholders wealth?
Wiki User
∙ 12y ago
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Is there a difference between corporate profit maximization and maximization of shareholder wealth?
Sure, profit maximization relates to profits *only* while shareholder wealth also involves total company equity, debt ratios and any of 15 other financial performance measure ratios. Management could focus on profit maximization over a longer period of time, say, 40 years (Toyota), while the shareholder would rather see stock values and corporate total value increase immediately (get in and get out) (90% of American manufacturers). If management focused on short-term profit maximization, say at the expense of long term sales revenues, then shareholder wealth (stock price) could actually decrease as a result of the loss of market share. The conflict of interests between shareholders and executives is an example of the "principle-agent problem."
Another name for stockholder wealth maximization is?
Another name for stockholder wealth maximization is maximization of the value of the common stock. Stockholders have little power in corporate decision making.
What is the difference between a non corporate shareholder and a corporate shareholder?
Corporation offering stocks ? Who can buy it ? 1- Other Corporations - Maybe Parent company to hold control 2- Individuals - make some money 3- Non corporate ? Who else remains ? .... Non-corporate means other legal forms of entities other than "corporation", like partnerships , limited liability companies .... but not individuals.
Why are ethics important in business when the aim of business is to maximise shareholder wealth?
§Good ethics should be seen as a driver of profitability rather than a burden on business. §An ethical framework is part of good corporate governance and suggests a well run business. §Investors are reassured about the company's approach to risk management. §Employees will be motivated in the knowledge that they operate in an environment of good ethical corporate behaviour
Why the goal of a corporation is wealth maximization rather 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.
What is meant by The Social Desirability of Shareholder Value Maximization?
Is it good for the society, as a whole, for management of corporate resources to be focused on maximizing shareholder value? Or are there
Is there a difference between corporate profit maximization and maximization of shareholder wealth?
Sure, profit maximization relates to profits *only* while shareholder wealth also involves total company equity, debt ratios and any of 15 other financial performance measure ratios. Management could focus on profit maximization over a longer period of time, say, 40 years (Toyota), while the shareholder would rather see stock values and corporate total value increase immediately (get in and get out) (90% of American manufacturers). If management focused on short-term profit maximization, say at the expense of long term sales revenues, then shareholder wealth (stock price) could actually decrease as a result of the loss of market share. The conflict of interests between shareholders and executives is an example of the "principle-agent problem."
Another name for stockholder wealth maximization is?
Another name for stockholder wealth maximization is maximization of the value of the common stock. Stockholders have little power in corporate decision making.
Differentiate between value for money and profit maximization concept in corporate governance?
differentiate between value for money and profit maximization
What is meant by wealth maximization in a corporate finance environment How are corporate securities contingent claims on the firm's value?
Wealth maximization has been accepted by the finance managers, because it overcomes the limitations of profit maximization. Wealth maximization means maximizing the net wealth of the company's share holders. Wealth maximization is possible only when the company pursues policies that would increase the market value of shares of the company.
What is business social responsibility and corporate profit maximization?
"corporate social responsibility" is how businesses monitor themselves ethically. Businesses incorporate things such as sustainability into their CSR plan
What has the author Karl Lins written?
Karl Lins has written: 'Corporate governance and the shareholder base'
What was the purpose of corporate shareholder That Were trusts in the US created in the late 1800s?
to improve working conditions
What was the purpose of corporate shareholder trust that were created in the US in the late 1800s?
to improve working conditions
What was the purpose of corporate shareholder trusts that were created in the US in late 1800?
to improve working conditions
What is the difference between a non corporate shareholder and a corporate shareholder?
Corporation offering stocks ? Who can buy it ? 1- Other Corporations - Maybe Parent company to hold control 2- Individuals - make some money 3- Non corporate ? Who else remains ? .... Non-corporate means other legal forms of entities other than "corporation", like partnerships , limited liability companies .... but not individuals.
Many corporate acquisitions lead to an erosion of shareholder value and that the price paid for the acquired corporate is usually excessive?
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