Shareholder Wealth Maximization And Corporate Social...

Examining Globalization From The Viewpoints Of Shareholder Wealth maximization And Corporate Social Responsibility Theories â€Å"Sell a stock rather than try to change the company’s policy.† Introduction Are the goals of globalization, the primary driving force for international economic and financial development, best supported by the paradigms of shareholder wealth maximization or do they match the ideas of corporate social welfare as exemplified by Catholic social teaching? Globalization in the modern day is impacting each and every aspect of today’s society, from poverty to corporate riches. Can the theory of corporate social responsibility solve some of the defects with globalization, or on the contrary, is it possibly illegal? Without globalization, society would not be capable of advancing and bestowing on its inhabitants the luxuries and security that we live with today. Due to its mass importance, is the corporate world held accountable to provide for the less fortunate or do they have a responsibility to their corporation and to nobody else. This essay will address the apparent dichotomy between shareholder wealth maximization using Milton Friedman’s classic defense of it (‘The Social Responsibility of Business is to Increase Its Profits’, by Milton Friedman, The New York Times Magazine, September 13, 1970) and catholic social thought, which argues for a stakeholders view (‘A Decade after Economic Justice for All: Continuing Principles, ChangingShow MoreRelatedMaximizing the Corporate Objective with the Stakeholder Theory1039 Words   |  4 Pagesmain contender to value maximization as the corporate objective is stakeholder theory, which argues that managers should make decisions so as to take account of the interests of all stakeholders in a firm, including not only financial claimants, but also employees, customers, communities, and governmental officials. Because the advocates of stakeholder theory refuse to specify how to make the necessary tradeoffs among these competing interests, they le ave managers with a theory that makes it impossibleRead MoreArgument For And Against Profit And Wealth Maximization1421 Words   |  6 Pages ARGUMENT FOR AND AGAINST PROFIT AND WEALTH MAXIMIZATION GOALS IN LIGHT OF CORPORATE FINANCE Every individual firm in any market segment has well set goals that it aims to achieve. These goals may be set by the owners or shareholders who must collaborate closely with the agents whom they have given the responsibility to manage the firm. The agents are basically the managers who through the agency theory must ensure that the firm is meeting its strategic goals. A firm with noRead MoreThe only legitimate objective of any firm is Maximization of Shareholder Wealth2220 Words   |  9 Pages 1. Introduction â€Å"Corporate finance theory, teaching and the typically recommended practice at least in the US are all built on the premise that the primary goal of a corporation should be the maximization of shareholder value.† (Krishnan, 2009) One often stumbles upon such statements while reading about shareholders value or maximization of shareholders wealth. This is also a typical answer to questions such as â€Å"what is the best and primary objective of a company in a competitive market†Read MoreStakeholder4051 Words   |  17 PagesStakeholders, Shareholders and Wealth Maximization V. Sivarama Krishnan, University of Central Oklahoma ABSTRACT This paper attempts reconciliation between the two somewhat extreme views espoused by the shareholder wealth maximization paradigm and the stakeholder theory. The stakeholder theory challenges the basic premise built into corporate finance theory, teaching and practice. Corporate finance theory, teaching and the typically recommended practice are all built on the premise that theRead MoreStakeholder Theory and Competing Concept1707 Words   |  7 PagesIntroduction Stakeholder theory was given by R. Edward Freeman, which was expressed many ways to represent the stakeholder as an important part of the corporate responsibility. According to Stenberg (1996), this stakeholder theory, is basically not capable to provide better corporate governance. He also stated that, this theory is unable to provide a better view of business performance (Edward Reed, 1983). Currently, the stakeholder theory has been grown up from its origin and seen as the conceptRead MoreTransparency Is Key Aspect of Corporate Governance1331 Words   |  6 Pagescompany reporting. Transparency is key aspect of corporate governance because of implementing corporate governance this will allow stakeholders and shareholders to review and evaluate performance of management and the company this ensures that the board of directors and the executive directors of corporations act in the best interest of shareholders and the corporations. It is implemented like a form of company law it is put in place so shareholders are protected and also so that the company is runRead MoreShareholder Value14482 Words   |  58 PagesThe purpose of the corporation: Shareholder-value maximization? Finance Working Paper N °. 95/2005 Revised version: February 2006 Petra Joerg Institut fà ¼r Finanzmanagement, Università ¤t Bern Claudio Loderer Institut fà ¼r Finanzmanagement, Università ¤t Bern Lukas Roth The Pennsylvania State University Urs Waelchli Institut fà ¼r Finanzmanagement, Università ¤t Bern  © Petra Joerg, Claudio Loderer, Lukas Roth and Urs Waelchli 2006. All rights reserved. Short sections of text, not toRead MoreTheories for Profit Maximization for Corporate Directors Essay650 Words   |  3 PagesCorporate directors have an important job of representing interests of stakeholders ranging from profit maximization in interest of shareholders, to a broader set of stakeholder interests such as creditors, employees and customers. These are governance systems with competing interests because you cannot focus on profit maximization for shareholders whilst keeping in mind stakeholders needs for employment and stability. The answer perhaps is found in â€Å"enlightened shareholder value† approach that providesRead MoreAnalysis Of William Allen s The Dodge Brothers 1896 Words   |  8 Pagesprovide increasing employment at good wages and to only incidentally make money.† (Allen 38) In contrast, the Dodge brothers, (the Founders of the Dodge division of Fiat) who owned roughly ten percent of the equity in Ford’s company, argued that the shareholders owned the enterprise and were entitled to force the directors, in this case Ford, to distribute some of the firm’s accumulated profit. The Justices of the Supreme Court ultimately ruled that Ford must pay the Dodge brothers dividends and not useRead MoreProfit Maximization vs Wealth Maximization5736 Words   |  23 PagesA PROJECT REPORT ON â€Å"PROFIT MAXIMIZATION V/S WEALTH MAXIMIZATION† Submitted to In requirement of partial fulfillment of Master of Business Administration (MBA) Submitted on Submitted by PREFACE As a part of the curriculum of the MBA Program of the _________________, the students are required to undergo project work in addition to their theoretical study so as to enable them to have the knowledge of theoretical aspects taught in the class room with its practical application. As students of management