CONTEMP.FINANCIAL MGMT. (LL)-W/MINDTAP
14th Edition
ISBN: 9780357292877
Author: MOYER
Publisher: CENGAGE L
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Question
Chapter 1, Problem 3QTD
Summary Introduction
To discuss: The kind of company that is more suitable to be a shareholder’s wealth maximizer one with wide proprietorship and no proprietors directly involved in the company’s management or one that is held closely.
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How to encourage the managers to act in a way which is consistent with the objective of maximization of shareholder wealth?
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Identify the conflict between the goal of shareholder wealth maximization and other stakeholder concerns (sometimes referred to as environmental, social, and governance (ESG) concerns).
Chapter 1 Solutions
CONTEMP.FINANCIAL MGMT. (LL)-W/MINDTAP
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- Explain the idea behind Shareholder wealth maximisation, mention proponents behind this approach, c level executives that have advocated the SHWM as the only corporate objectivearrow_forwardIt has been argued that shareholder wealth maximization is not a realistic normative goal for the firm, given the social responsibility activities that the firm is “expected” to engage in (such as contributing to the arts, education, etc.). Explain why these social responsibility activities are not necessarily inconsistent with shareholder wealth maximization.arrow_forwardWhat other objectives that are important to a public limited company which are in-line with the primary objective of shareholder wealth maximization?arrow_forward
- Shareholder wealth maximization and social responsibility – Is shareholder wealth maximization inconsistent with social responsibility (contributing to the arts, education, social programs, etc.)? Explain why social responsibility activities may or may not be inconsistent with shareholder wealth.arrow_forwardHow does attracting equity capital easier for a corporation?arrow_forwardWhy should maximizing the wealth of our owners be your PRIMARY financial objective as a future Chief Financial Officer of a publicly listed firm, but corporate social responsibility is considered secondary only?arrow_forward
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