Corporate Assignment Abdisamad Essay

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Student ID :
CGSSO00015316
Student Name :
Abdisamad Abdullahi Abdulle
Course Code :
BMCF5103
Course Name :
Corporate finance
Program :
Master Of Business Administration MBA
Semester :
Five
Assignment :
Answers
Facilitator :
Ibraahim Moh’ud Hamud
Date due :
12 Nov, 2014
Submission Date :
12 Nov, 2014

1.0 QUESTIO N ONE

1.1
Introduction
3
1.2
Value maximization and other goals

3
1.3
Customer and employee safety
4
1.4
General goodness of society
4
1.5
Conclusion
5

2.0 QUESTION TWO
2.1
Introduction
6
2.2 Corporate ownership

6
2.3
Agency problem
8
2.4
Conclusion
8

3.0 QUESTION THREE
3.1
Introduction
9
3.2 The
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Maximizing value does not mean that a firm has to be illegal and social outlaw.
1.4 GENERAL GOODNESS OF SOCIETY
According to Bratton and Wachter (2013) found that Shareholder value maximization is broadly associated with social welfare maximization. Those who make the relationship tend to go on to state that management agency costs are extreme and that increased shareholder power would reduce the costs. Reduced agency costs by definition enhance shareholder value, which in turn is assumed to imply social welfare enhancement.
Bratton and Wachter (2013) also found that the shareholder interest, as the outstanding right on corporate wealth, is straight aligned with society's interest in maximizing corporate-and therefore societal-wealth, and so the shareholder interest succeeds for political attentiveness. In current years, the mission for political attentiveness has made the jump from theory to practice: a "shareholder class" is said to have risen in our political economy as a side-shoot of the growth of stock ownership among the middle class. Therefore, real-world shareholders again are seen to bear on social welfare.
In a same concept, according to Dolenc, stubelj and Laporšek (2013) value maximization within a company can result to social welfare maximization. Social welfare is created when a firm produces outputs that are valued by its customers at more than is the value of inputs for their production. As long as the firm is capable of selling its outputs at

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