Maximizing profit over the life of the firm bears no relationship to the goal of maximizing shareholder value.

Question

Quizplus · Accepted Answer

Maximizing shareholder value is one of the key goals of a firm, and maximizing profit is one way to achieve that goal over the long term. By earning profits, a firm can reinvest in growth opportunities or pay dividends to shareholders, both of which can increase shareholder value. Maximizing profit is therefore a means to an end, which is to create value for shareholders.

Maximizing Profit Over the Life of the Firm Bears No