Maximization of shareholder wealth is a concept in which
A) increased earnings is of primary importance.
B) profits are maximized on an annual basis.
C) virtually all earnings are paid as dividends to common stockholders.
D) optimally increasing the long-term value of the firm is emphasized.

Question

Quizplus · Accepted Answer

Maximization of shareholder wealth is focused on increasing the long-term value of the firm by making strategic decisions that increase the value of the company's stock. This involves considering factors such as profitability, risk, and investment opportunities to balance short-term gains with long-term growth. Therefore, option D optimally captures the essence of this concept as it emphasizes the need for a longer-term perspective rather than just focusing on short-term earnings or dividends.

Maximization of Shareholder Wealth Is a Concept in Which