The primary operating goal of a publicly-owned firm trying to best serve its stockholders should be to
A) Maximize managers' own interests,which are by definition consistent with maximizing shareholders' wealth.
B) Maximize the firm's expected EPS,which must also maximize the firm's price per share.
C) Minimize the firm's risks because most stockholders dislike risk.In turn,this will maximize the firm's stock price.
D) Use a well-structured managerial compensation package to reduce conflicts that may exist between stockholders and managers.
E) Since it is impossible to measure a stock's intrinsic value,the text states that it is better for managers to attempt to maximize the current stock price than its intrinsic value.

Question

Quizplus · Accepted Answer

The primary operating goal of a publicly-owned firm should be to align the interests of managers with those of the stockholders, which can be effectively achieved through a well-structured managerial compensation package. This helps in reducing conflicts of interest and ensures that managers work towards maximizing shareholder value.

The Primary Operating Goal of a Publicly-Owned Firm Trying to Best