Is profit maximization alone an appropriate goal for the firm? Why or why not? Who in a corporation is responsible for protecting and managing stockholders interest? How is profit maximization different from maximizing shareholder wealth?
No profit maximization alone is not an appropriate goal for the firm. The profit maximization has certain pitfalls as a criterion, which are as follows:
It is Vague
It Ignores the Timing of Returns
This brief solution looks at the weaknesses of profit maximization for usage in a firm's goal and explains the key difference between profit maximization and shareholder wealth. Reference used is included.