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Stock Price Maximization and Society

The document discusses whether stock price maximization benefits society. It argues that the same actions that maximize stock prices - like efficient operations, high-quality and low-cost products/services, and developing new technologies and products that consumers want - also benefit society. However, a study found that none of the corporations surveyed explicitly mentioned maximizing shareholder wealth as their objective, and instead focused on profitability and risk management. The implications of these findings are discussed.

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Md Shohag Ali
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755 views1 page

Stock Price Maximization and Society

The document discusses whether stock price maximization benefits society. It argues that the same actions that maximize stock prices - like efficient operations, high-quality and low-cost products/services, and developing new technologies and products that consumers want - also benefit society. However, a study found that none of the corporations surveyed explicitly mentioned maximizing shareholder wealth as their objective, and instead focused on profitability and risk management. The implications of these findings are discussed.

Uploaded by

Md Shohag Ali
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd

Is the goal of maximizing the stock price good for society; that is, do the

same actions that maximize stock prices also benefit society?


The same actions that maximize stock prices also benefit society. Stock price
maximization requires efficient, lo!cost operations that produce high!quality
goods and ser"ices at the loest possible cost. Stock price maximization
requires the de"elopment of products and ser"ices that consumers ant and
need, so the profit moti"e leads to ne technology, to ne products, and to
ne #obs. $lso, stock price maximization necessitates efficient and courteous
ser"ice, adequate stocks of merchandise, and ell!located business
establishments!!factors that are all necessary to make sales, hich are
necessary for profits.
In a recent study of fi"e hundred corporations %rofessor &ack Skeptic
found that non one firm mentioned maximizing shareholders' ealth as
an ob#ecti"e of the firm. (n the contrary, most of the stressed profitability
and risk as the key "ariables affecting their decision. )iscuss the
implications of these findings.
*+e ha"e no goals for the firm, e are too busy making money, - hy
might this be a perfectly acceptable motto for a corporate president? +hy
might this same motto be unacceptable for the authors of a textbook on
capital budgeting?

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