According to Berk and DeMarzo (2020) the primary goal of the firm is to maximize shareholder wealth (i.e., increase the value of the owner’s shares). Some contend that maximizing stakeholder wealth is a better objective. Indicate whether you believe that maximizing shareholder wealth or maximizing stakeholder wealth is a more appropriate objective and why. Include at least two citations that support your response.
According to Berk and DeMarzo (2020) the primary goal of the firm is to maximize shareholder wealth (i.e., increase the value of the owner’s shares). Some contend that maximizing stakeholder wealth is a better objective. Indicate whether you believe that maximizing shareholder wealth or maximizing stakeholder wealth is a more appropriate objective and why. Include at least two citations that support your response.
Stakeholder of a company- A stakeholder of a company can be any individual , group i.e., employees, customers, suppliers, shareholders, communities and governments who has interest in the company's operations or affairs of the company.
Stakeholder is a broad term as it includes shareholders also.
Shareholders of a company can be a person , company, institutions who owns equity in the company i.e., shareholders own the company.
Maximizing shareholders wealth means increasing the value of a company so that it results in increasing the value of the shares being held by the shareholders and the best example of wealth maximization is positive changes in the price of a company's share. Maximization of shareholders wealth would also mean increasing the flow of dividends in the hands of shareholder.
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