Craig Smith This paper examines the Shareholder Primacy Norm SPN as a widely acknowledged impediment to corporate social responsibility and explores the role of business schools in promoting the SPN but also potentially as an avenue for change by addressing misconceptions about shareholder primacy and the purpose of business.
Is Shareholder Wealth Maximization Immoral?
Is Shareholder Wealth Maximization Immoral?. Financial Analyst Journal, In the article above, John Dobson effectively evaluates shareholder wealth maximization, clearly helping to foster the understanding of its objective with respect to justifying the behavior in business.
With respect to the above, the author has shared useful insight with respect to the discussion of the financial, economic theory upon which the question of the morality of the shareholder wealth maximization finds the basis.
Ideally, the reading challenges one understands and perception of the financial, economic theory bringing forth the foundation for constructive discussion based on the integral financial matter it covers. In as much as the wealth maximization concept provided by the financial, economic theory finds significant criticism, the basis upon which it finds its justification is relatively strong.
The reason for the above is that in as much as a corporation may want to adhere to various social ethics and values; it remains indebted to the stakeholders than to the general public.
In fact, shareholder maximization is an ideal ideology with the reference that it ensures that the stockholders are comfortable and satisfied at all time. Every business owes a lot to the shareholders for its survival.
In the event that the general society is unhappy with a business organization, there still are chances of survival.
However, unsatisfied shareholders mean the end of the business thus the justification of the shareholder wealth maximization concept of the financial, economic theory.
Before you go, you are invited to support a noble cause on IndieGoGo:Unrealistic Difficult Inappropriate Immoral Shareholders’ Wealth Maximization 15 Maximizes the net present value of a course of action to shareholders. Accounts for the timing and risk of the expected benefits.
Benefits are measured in terms of cash flows. Fundamental objective—maximize the market value of the firm’s shares. Corporate Governance in Nigerian Banks: a Theoretical Review.
International Journal of Management Science ().
Corporate Governance in Nigerian Banks: a Theoretical Review. International Journal of Management This theory states that managers create agency costs for the firm by not working for the maximization of shareholders wealth.
Introduction to Financial Management 7 Favourable Arguments for Wealth Maximization (i) Wealth maximization is superior to the profit maximization because the main aim of the business concern under this concept is to improve the value or wealth of the shareholders.
View Notes - Is Shareholder Wealth Maximisation Immoral from FINS at University of New South Wales. Reproduced with permission of the copyright owner. Further reproduction prohibited without%(1).
Since the 12th century and the escalation of separate owner / managed business organizations, the assumption that firms maximises profits has been at the forefront of economic theory. Immoral.
7 Maximizing EPS Ignores timing and risk of the expected benefit Market value is not a function of EPS. Hence maximizing EPS will not result in shareholders’ wealth maximization is the second-level criterion ensuring that the decision meets the minimum standard of the economic performance.