Corporations Should Pursue Goals Creating Profit For Shareholders

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Whether or not corporations should pursue goals besides creating profit for shareholders has long been a matter of debate. For my part, the statement that “The actions undertaken by a corporation in the pursuit of shareholder wealth are justified, as long as they are not illegal” is valid. The reasons are presented below. To begin with, a corporation is created for the purpose of creating wealth for shareholders. In terms of property rights, shareholders that invested the principal are the joint owner of the tangible assets and residual revenues of the corporation, with the management serving as the trustee for the property. In Friedman’s (197x) view, since the shareholder is the owner of the business, the corporation has only one…show more content…
Advocates of social welfare argue that firms are obliged to act in a socially responsible manner. Dodd (xxx?) also argued that businesses must engage in social services, even at the expense of profits, in order to serve the best interests of employees, creditors, customers, and other stakeholders, as it appears that there exists a positive relationship between social and financial performance (xxx?), and socially responsible business practices affect all aspects of business operations and contribute significantly to corporate productivity and profitability (Website of Business for Social Responsibility). In other words, a corporation should engage with social interests in order to fulfil its social responsibility and to maximise long-run profits. In the case that there is no conflict between the search for profits and the general interest of society, then a corporation can simply pursue both interests at the same time, and certainly the actions undertaken in the pursuit of shareholder wealth are justified, so long as they are legal. For instance, Delfglaauw (2000) claimed that owing to the advancement in technology, individuals’ action and reactions are increasingly visible and immediate. Companies are also under public scrutiny as never before. Under such circumstances, interest of shareholders and the society at large are aligned. Corporations should pursue both shareholder wealth and meet the increasing social expectations, for a flawed public image of a
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