Shareholders are the people who own share of stock in a company. Shareholders are the owners of the company, since each share stock entitles owner to say in how the corporation is run. Shareholders elect a board of directors to make the company’s major decision, such as the number of shares to be issued to the public.
Shareholders wealth maximization is maximization of shareholders purchasing power. It is attempt made by a shareholder to accumulate as much wealth as possible, by whatever means possible. Wealth maximization is a long term objective, although is some instances a short term effort may be carried out to provide shareholders with wealth.
Shareholder wealth is the collective wealth right on shareholders through their investment in a company. Members of the board have involved duty to the shareholders and a responsibility to protect their investment by running the company sensibly and in line with generally accepted practice.
Each shareholder holds a small portion of the company. Issuing more shares will reduce shareholders wealth, while providing dividends to existing shareholders will increase it. Investors who purchase stock may take a long position with the goal of profits at a future date, or they may intend to capitalize on their wealth by selling the stock of another party and making money on the transaction.
Companies can determine shareholder wealth by looking at overall company value in term of the current value per share and number of stocks issued. Sometimes board members make strategic decision that will temporarily reduce shareholder wealth, such as investing in new facilities or technologies. These investments will add value later, and are acceptable to shareholders because they demonstrate a des...
... middle of paper ...
Bainbridge, S. (2006, february 7). The Importance of the Shareholder Wealth Maximization Standard. Retrieved march 21, 2014, from http://www.ideasinactiontv.com/tcs_daily/2006/02/the-importance-of-the-shareholder-wealth-maximization-standard.html
Peavler, R. (2010). What is Shareholder Wealth Maximization and Should Firms Pursue it? Retrieved march 22, 2014, from http://bizfinance.about.com/od/Basic-Financial-Management/a/what-is-shareholder-wealth-maximization.htm
Serlin, R. H. (2013, August 04). Is maximal profit at any cost really what shareholders want? Retrieved march 22, 2014, from http://richardhserlin.blogspot.com/2013/08/is-maximal-profit-at-any-cost-really.html
Wright, T. C. (2009). What Are a Shareholder's Objectives? Retrieved march 22, 2014, from http://yourbusiness.azcentral.com/shareholders-objectives-17287.html
Need Writing Help?
Get feedback on grammar, clarity, concision and logic instantly.Check your paper »
- CFO of a company has the responsibility in maximizing the shareholders wealth without affective the goals of the organization. CFO is responsible for making crucial financial decision of a company. CFO of a company has to play the role of a steward, catalyst, operator and strategist, no investment decision of the company can be made without the approval of the CFO. These roles and responsibilities clearly narrate their significant part in shareholders wealth maximization. There are many ways a CFO can use to maximize the shareholders wealth.... [tags: market, cash flow, revenue]
550 words (1.6 pages)
- QUESTION 1 (i) Security markets refer to any type of financial investment at the stock market. A security market encompasses; equity markets, bond markets, and derivatives markets. Only a few companies in East Africa are enlisted at the stock exchange due to the technicalities of listing companies and the disadvantages that comes with it. Enlisting a company at the securities exchange market has advantage and disadvantages. The following are some of the advantages and disadvantages of enlisting a company at the securities exchange market; Advantages of Enlisting a Company at the Securities Exchange Market (a) Free Coverage and Publicity; Enlisting a company at the securities exchange market... [tags: Stock market, Stock exchange]
1382 words (3.9 pages)
- Solyndra Solyndra is a solar panel manufacturing company that was supported by the Obama Administration that ultimately failed to deliver what they promised “Solyndra 's federally funded venture--with a price tag of $527 million, or about $1.68 for every man, woman and child in America--was supposed to be the litmus test of the Administration 's ability to fund "good projects quickly," according to a 2009 Energy Department e-mail” (Scherer, 2011). What made Solyndra’s technology better than all other solar panel manufacturers is they were manufacturing panels without silicon which is what makes solar panels so expensive.... [tags: Debt, Credit, Limited liability company, Ethics]
1674 words (4.8 pages)
- The following is an essay which discusses the issue of whether Shareholders should have a say on Executive Compensation. Corporate governance can be defined as a set of procedures by which an organisation is regulated. The framework ensures transparency and accountability in business dealings whilst taking into account stakeholders’ interests. Executive Compensation, a formerly marginalised topic in British society and corporate world, has been brought to the frontline of British society by extensive media coverage, due to the subprime mortgage disaster which caused the collapse of some banks, most notably, RBS and Lehman Brothers.... [tags: Management, Corporate governance]
755 words (2.2 pages)
- “When you’re young, saving for something that’s years away—aka retirement—may not seem important. But it is exactly when you should start saving. The more time your money is invested, the more time it has to grow.” (Fidelity) Stocks are a great and somewhat easy way to have the money that is invested in them exponentially grow overtime. It’s a great way to start saving for future plans like a family and retirement, and can become more and more beneficial throughout the years. Even investing small amounts of money into the market can lead to larger profit in the future.... [tags: Stock market, Stock, Preferred stock, Security]
1581 words (4.5 pages)
- These are the most known security for financial market investment. This type of security represents the practice of ownership in a specific company. The fact is that ownership of particular firms end up being divided within a number of stocks according to shares. Stocks tend to share a tiny fraction of any firm. The stock holds a tiny fraction of ownership of the firm whereby it holds itself in such a right position to take part in the decisions of the firms. Net profit in a company is divided in two destinies such as through investment of the profits on the firm.... [tags: Stock, Stock market, Mutual fund, Stock exchange]
1012 words (2.9 pages)
- Introduction The idea of investing in the stock market is at times challenging. Heightened activities witness the stock market itself. These activities gained the investor’s interest increasingly. The stock market patterns have changed due to the current globalization and integration of the subsequent markets. Just to name some of the global markets are New York Stock Market, Hong Kong Stock exchange among others. Sometimes these market patterns have changed due to politico-economic backgrounds (Hamid Faruqee, 2008, p.... [tags: stock market, shares, economy]
1790 words (5.1 pages)
- Hewlett Packard – Recommendations An important phase in the decision making process is evaluating the decision-making process. This process involves collecting information pertaining to how well the decision is working and if the targeted outcomes are being hit. Many indicators to analyze this data need to be quantifiable goals. Quantifiable goals such as sales targets, profit and loss data, order fulfillment data and other important metrics will help indicate weaknesses and strengths when measuring whether or not the desired outcomes are being met.... [tags: Decision making, Marketing, Decision theory]
1223 words (3.5 pages)
The Decision Of An Executive Using Corporate Assets For Social Policies Violates Shareholders ' Autonomy
- Although Friedman never in the article uses the term “autonomy” in the article, it is clear that the act of an executive using corporate assets to contribute to social policies violates shareholders’ autonomy. In Kant’s Deontology, this would imply that the shareholders’ are being used as means to the end of a social good, which is a violation of the second formulation of the categorical imperative (Johnson, 2004). This is something that I concede to, but one of the primary issues that I have with the article stems from Friedman’s definition of those who are concerned with the actions of a business.... [tags: Corporation, Ethics, Morality, Immanuel Kant]
1427 words (4.1 pages)
- Investment Risk in Stock Market Securities Introduction: Stories of people making fortunes from the securities market have enticed many others into risky investments. Congress created the Securities & Exchange Commission (SEC) to protect investors. Many corporation managers became greedy and made self-serving decisions that created the principle-agent problems. The solutions for these problems lead to more unethical behavior from management. The creative use of financial statements even tricked analysts and brokers.... [tags: Investment Stock Market Accounting]
1259 words (3.6 pages)