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Shareholder's Wealth and Corporate Governance

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a. If the goal of a firm is to maximize the shareholders' wealth, does it mean profit is not important at
all? Explain your answer.
b. What are the advantages and disadvantages of the three principal forms of business organization?
c. Briefly explain the term "agency costs" as related to a corporation. How can agency problem be
minimized when a company uses debt?
d. In pursuing the goal of a firm, why is corporate governance important?

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Solution Summary

This review into business organization conducts strategies to dealing with shareholder's wealth and corporate governance.

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a. If the goal of a firm is to maximize the shareholders' wealth, does it mean profit is not important at all? Explain your answer.

Consider the main objective in maximizing shareholder's wealth is business initiative for staying productive in producing goods and services, in which, the investment support continues forward for continuity. The aim is in profitability for senior level management to adhere to the shareholders concerns by implementing business strategies that targets the ultimate goal in sustainability. In doing so, the outcome is bleak for any business continuity within the targeted ...

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Nichel Anderson, MBA, PhD (IP)
Education
  • BA, American Intercontinental University
  • MBA, American Intercontinental University
  • PhD (IP), Grand Canyon University
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