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What is the difference in emphasis on short-term results for firms that maximize stock price vs firms that maximize profit?

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Explain why a firm that strives to maximize stock price should be less subject to an overemphasis on short-term results than one that simply maximizes profits.

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This solution discusses why a firm that strives to maximize stock price should be less subject to an overemphasis on short-term results than one that simply maximizes profits in 185 words.

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Firms that strives to maximize stock prices should be more focused on long term results and profit maximization rather than focusing on short term results because by focusing on immediate gains and quick profits, firms will often make mistakes and cause deviations from the corporate mission ...

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Sandeep Bardia, MBA
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  • BCom, SGTB Khalsa College, University of Delhi
  • MBA, Rochester Institute of Technology
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