There are many potential goals of a corporation, such as: minimize costs, maximize sales, maximize employment, maximize earnings, maximize shareholder wealth, maximize dividend payments, etc. Which one is the best for the long-term health of the company and society?

Question

Lexi

Business

2 May, 08:38

There are many potential goals of a corporation, such as: minimize costs, maximize sales, maximize employment, maximize earnings, maximize shareholder wealth, maximize dividend payments, etc. Which one is the best for the long-term health of the company and society?

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Answers (1)

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Isai · Answer 1

The best for long-term health of the company and society is maximize the shareholder wealth.

Explanation:

'Shareholder wealth' means the market price of common stock of a firm. The goal to maximize the shareholder wealth means that management should try to make the current value of the returns as maximum that are expected in future, for the shareholders of the firm.

'Market value' means the value at which the stock trades in the market, like what is its price in 'New York Stock Exchange' is its market value. So, out of the given goals, to maintain a good health of company for a long time, it should maximize the shareholder wealth.