A major problem encountered by firms that adopt the goal of maximizing shareholder value is the tendency to concentrate on increasing short-term profits at the expense of long-term profits.

Question

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Maximizing shareholder value often leads firms to prioritize short-term profits over long-term profits, as the focus is on meeting quarterly expectations and generating immediate returns for shareholders. This can be detrimental to the company's long-term success and sustainability.

A Major Problem Encountered by Firms That Adopt the Goal