Profit Maximization / Maximization of Shareholder Wealth

The primary goal of financial management regarding corporations should be to maximize shareholder wealth on the whole. If management was to only concentrate on profit maximization, they would more than likely run their corporations into the ground. The very existence and concept of a corporation is beneficial to business in numerous ways. First and foremost, corporate status helps release management from possible enourmous financial liability issues. Second, shareholders are the key of checks and balances …

…of pollution control may cost more for the corporation than not deploying the controls, it would create a more loyal customer base. I believe that a loyal customer base is more beneficial to have than a fly-by-night customer. As shareholders are rewarded financially and P/E grows, corporations appear to be winning investments on the stock market. The more value customers perceive in a business, the more likely they are to financially support the institution.