Question

There are many potential goals of a corporation, such as: minimize costs, maximize sales, maximize employment, maximize earnings, maximize shareholder wealth, maximize dividend payments, etc. Which one is the best for the long-term health of the company and society?

Answer 1

The value maximization of the corporation is the best for the long-term health of the company and society. The primary goal of a corporation is the maximize shareholder’s wealth and value creation. A firm’s value can be maximized if its expected benefits are maximized in the long-run while profit maximization is relatively for short term. This is the primary goal above all others because maximizing stockholder’s value can be done by maximizing the revenue of the company and minimizing the cost so that the organizations can perform more efficiently. The good performance of the organization will finally reflect in the shares of the company and it will benefit the stock holders of the company and help the company to continue its business and become competitive in long run.