answersLogoWhite

0

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.

User Avatar

Wiki User

14y ago

What else can I help you with?

Continue Learning about Economics

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

it is operating cost


What is the difference between profit maximization and wealth 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 are the similarities between profit maximisation objectives and wealth maximisation objectives?

Both profit maximization and wealth maximization have the objective of increasing the net worth.


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 Profit maximization can never be the objective of a firm?

Profit maximization IS an objective of a firm, but its not the ONLY objective. A firm will have different long term and short term goals which will vary depending on the current business cycle. If you need a more specific answer, please ask a more specific question. - Stavka

Related Questions

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


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


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

it is operating cost


What is the difference between profit maximization and wealth 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 primary objective of the firm?

The primary objective of a firm is to maximize profit and shareholder value while meeting the needs of its customers and stakeholders, and operating in a sustainable and ethical manner. This involves making strategic decisions that optimize resources and generate long-term growth and success.


What are the similarities between profit maximisation objectives and wealth maximisation objectives?

Both profit maximization and wealth maximization have the objective of increasing the net worth.


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.


What is Shareholder wealth maximization?

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.


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

Profit maximization is short term as compare to share holder's wealth maximization, Managers should focus on Share holder's wealth maximization because its what they are hired for. also there are sevseal reasons such as.... 1) the share holders wealth is be considered.. 2)profit maximization doesnt say which type of profit it should maximize-short term or long term 3)profit maximization ignores the social values but only aims at earning maximum profit. 4)wealth maximization also considers improving the goodwill of the organization


What are the difference between value maximation and profit maximation?

Value maximization and profit maximization are very much related, the main difference being- value maximization means increases in owners' wealth achieved by maximizing of the value of a firm's common stock. profit maximization is the process by which a firm determines the price and output level that returns the greatest profit. the other difference among the two could be sited as- value maximization is seen as long term objective of a firm, whereas profit maximization is generally a short term objective.


Profit maximization is top pririoty objective of CEO?

It depends. If the company is a public company (Ones that have shares traded in organized stock exchanges) then the top priority of the CEO would be shareholder wealth maximization. If it is a private company, the CEO decides on what the owners of the company want and prioritize.


What are the basic objectives of financial management?

The objective of financial management is wealth maximization rather than profit maximization. Wealth maximization means the total value of the firm.