If managers are making decisions to maximize shareholder wealth,then they are primarily concerned with making decisions that should:
A)positively affect profits.
B)increase the market value of the firm's common stock.
C)either increase or have no effect on the value of the firm's common stock.
D)Accomplish all of the above.

Question

Quizplus · Accepted Answer

Maximizing shareholder wealth means increasing the market value of the firm's common stock, which is the answer choice B. While positively affecting profits may be a means for achieving this goal, it is not the end goal itself. Increasing the value of the firm's common stock is the primary concern for maximizing shareholder wealth. Choice C is not entirely accurate, as decisions that decrease the value of the firm's common stock would not align with the goal of maximizing shareholder wealth. Choice D is incorrect as it includes the option of decisions having no effect on the value of the firm's common stock, which would not align with the goal of maximizing shareholder wealth.

If Managers Are Making Decisions to Maximize Shareholder Wealth,then They