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Corporation goals

The primary goal of a corporation is to maximize shareholder value. Does that goal conflict with the firm's responsibility in regards to other stakeholders and the environment?

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A conflict of interest arises when the managers, shareholders or other stakeholders have different objectives. This conflict of interest raises the agency problems for the organization. The highly evident conflict of interest is between the managers and the shareholders.

Sometimes managers may take decisions those conflicts with the goals of the organization to maximize shareholders wealth. For example, it has been found out that a conflict of interest is most likely arise when the firm's manager have too much cash at there disposal. When there is too much cash available the firm manager either use it to finance some pet projects or use it for perquisites like building highly luxurious offices, purchasing corporate and many other and all of these efforts has a little impact on the maximization of shareholder's wealth. Also some times managers charge a hefty amount at the ...

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This solution is comprised of a detailed explanation of Corporation goals.