The management's primary goal is stockholder wealth maximization, which, translates into _____.
A)maximizing the value of the firm as measured by the price of its common stock
B)maximizing the earnings per share of the stockholders
C)maximizing the dividends received by stockholders
D)maximizing the net income earned by the company
E)maximizing the managerial compensation (incentives)

Question

The management's primary goal is stockholder wealth maximization, which, translates into _____. 
A)maximizing the value of the firm as measured by the price of its common stock
B)maximizing the earnings per share of the stockholders
C)maximizing the dividends received by stockholders
D)maximizing the net income earned by the company
E)maximizing the managerial compensation (incentives)

Quizplus · Accepted Answer

Stockholder wealth maximization aims to maximize the value of the firm as measured by the market price of its common stock. This goal encourages managers to make decisions that increase the long-term profitability and growth of the company, which ultimately benefits the stockholders. Maximizing earnings per share or dividends received by stockholders may be part of this goal, but they are not the primary focus. Maximizing net income or managerial compensation may not necessarily align with the long-term interests of the stockholders.

The Management's Primary Goal Is Stockholder Wealth Maximization, Which, Translates