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Pages:
1 page/β‰ˆ275 words
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3 Sources
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APA
Subject:
Business & Marketing
Type:
Essay
Language:
English (U.S.)
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Topic:

Shareholder Wealth Maximization and its Advantages and Disadvantages

Essay Instructions:

discuss the topic of maximizing shareholder wealth. This topic has been researched and studied for many years, with mixed results. For example, Irving Fisher, a prominent American economist, argued that maximizing shareholders’ wealth should be management’s primary goal (Cardao-Pito, 2016). Conversely, Sollars and Tuluca (2016) suggested that shareholders should only be rewarded with returns that are “commensurate with the risk they take” (p. 203).
Watch this video on Social Responsibility Perspective: The Stakeholder and Shareholder Approach (Alanis Business Academy, 2014). After viewing the video, briefly share your thoughts about shareholder wealth maximization. Then, explain the advantages and disadvantages of wealth maximization from the perspective of a company’s chief financial officer. Include the effect on company stakeholders, both internal (managers, employees) and external (suppliers, shareholders).
References:
Alanis Business Academy. (January 6, 2014). Social responsibility perspectives: The shareholder and stakeholder approach [Video]. https://www(dot)youtube(dot)com/watch?v=vD9XJKZmXEs
Cardao-Pito, T. (2017). Classes in maximizing shareholder's wealth: Irving Fisher's theory of the economic organization in corporate financial economics textbooks [Electronic version]. Contemporary Economics, 11(2), 369–381.
Sollars, G. G., & Tuluca, S. A. (2018, April). Fiduciary duty, risk, and shareholder desert [Electronic version]. Business Ethics Quarterly, 28(2), 203–218.

Essay Sample Content Preview:

Weekly Post 1
Student Name
Instructor Name
Institutional Affiliation
Course Number and Name
Due Date Weekly Post 1 The video presents informative details about the concept of wealth maximization. The arguments arising from this video paint this idea as a progressive approach that businesses should prioritize. It underlines that it should remain a core goal for establishment without deviations that would dwindle the profit margins for the shareholders (Alanis Business Academy, 2014). However, these claims may not necessarily represent the actual situation. Businesses face complex and dynamic environmental factors that could affect their profitability. As a result, focusing on shareholder wealth maximization could emerge counterproductive when these factors turn hostile to the institution. The narrator in the video highlights that although the concept remains fundamental, it also presents various risks for the business. In this context, zeroing on maximizing wealth for the shareholders, as Alanis Business Academy’s (2014) video describes, maybe a risky endeavor. Instead, firms should recognize the importance of integrating social responsibilities alongside their wealth maximization efforts. As a company financial officer, wealth maximiz...
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