Why should financial managers strive to maximize the current value per share of the existing stock?
A)doing so guarantees the company will grow in size at the maximum possible rate
B)doing so increases employee salaries
C)because they have been hired to represent the interests of the current shareholders
D)because this will increase the current dividends per share
E)because managers often receive shares of stock as part of their compensation

Question

Quizplus · Accepted Answer

Financial managers are hired to represent the interests of the current shareholders, therefore they have a fiduciary responsibility to maximize the current value per share of the existing stock. This will benefit the current shareholders by increasing the value of their investment in the company.

Why Should Financial Managers Strive to Maximize the Current Value