Maximization of shareholder wealth as a goal is superior to profit maximization because:
A)it considers the time value of the money.
B)following the shareholder wealth maximization goal will ensure high stock prices.
C)it considers uncertainty.
D)A and C.

Question

Quizplus · Accepted Answer

Maximizing shareholder wealth is a superior goal because it considers not only the profitability of a company, but also the time value of money and uncertainty. Profit maximization, on the other hand, only focuses on short-term profits without considering the long-term effects on the company's financial health. Additionally, maximizing shareholder wealth will often lead to high stock prices as investors will be more likely to invest in a company that is focused on long-term financial sustainability.

Maximization of Shareholder Wealth as a Goal Is Superior to Profit