Question

What should be the primary objective of managers?

Answer 1

The primary objective of the managers is to maximize the wealth of shareholders.

Managers are the agents hired by shareholders (principals) to maximize their wealth. Managers have more information and control over the day to day businiess activities of the company.

Through their decision making skills, managers aim to reduce cost, increase profits and ultimately create wealth. Every action of the managers indirectly helps in maximizing the wealth of shareholders.