EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN: 8220103648554
Author: MOYER
Publisher: CENGAGE L
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Chapter 1, Problem 5QTD
Summary Introduction
To discuss: The reasons of social responsibility activities are not inconsistent with the wealth maximization of shareholders.
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It has been argued that shareholder wealth maximization is not a realistic normative goal for the firm, given the social responsibility activities that the firm is “expected” to engage in (such as contributing to the arts, education, etc.). Explain why these social responsibility activities are not necessarily inconsistent with shareholder wealth maximization.
The net present value technique is an approach that goes against the goal of shareholder wealth maximization.
True
False
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EBK CONTEMPORARY FINANCIAL MANAGEMENT
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- Shareholder wealth maximization and social responsibility – Is shareholder wealth maximization inconsistent with social responsibility (contributing to the arts, education, social programs, etc.)? Explain why social responsibility activities may or may not be inconsistent with shareholder wealth.arrow_forwardExplain and evaluate how the primary of objective in financial management of maximizing shareholder wealth is at conflict with other objectives such as ensuring favorable outcomes for (Note if your organization is public sector consider the alternative objective of minimizing the net cost to the government)arrow_forwardHow to encourage the managers to act in a way which is consistent with the objective of maximization of shareholder wealth?arrow_forward
- Why should shareholder wealth maximization be the overriding objective of the management?arrow_forwardWhy do you think that wealth maximization is an appropriate goal of the firm? Does it lead to maximization of the wealth of shareholders? Does an attempt by the management to maximize value ofthe firm benefit the society? Explain.arrow_forward
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