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Corporate Finance: Maximizing Shareholder Wealth

Question: What would you do if the goal of maximizing the stock value was in conflict with other goals (i.e. customer and employee safety, the environment)? What steps would you take to avoid unethical or illegal behavior? Why?

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Maximizing shareholder wealth and ethical behavior are two of the most important principles within finance. The normal thought process is that maximizing shareholder wealth ranks as the most important because we are providing the highest return possible to our owners - the shareholders. At the same time. logic and courtesy, and sound business practices dictate that we use integrity and ethical business practices to further our reputation and standing within the business community.

As a former CFO of a large distribution facility, I would opt to insure ethical behavior and standards for operating - not in conflict with our primary goal of maximizing shareholder wealth, but in concert with running an efficient and well thought of organization. Remember that we have corporate ...

Solution Summary

This solution discusses how to balance seemingly conflicting financial principles of maximizing shareholder wealth and ethical behavior.