Final answer:
Management may pursue various goals apart from shareholder wealth maximization due to stakeholder theory, which balances the interests of all parties, and due to regulatory, social, and political pressures like safety and liability standards. Additionally, established firms with transparent performance can attract diverse investors who have different objectives.
Step-by-step explanation:
Management may pursue goals other than shareholder wealth maximization for several reasons. The traditional view of shareholder primacy suggests that managers have a duty to act solely in the interest of shareholders, given shareholders' investment and ownership stakes in the company. However, stakeholder theory posits that managers should balance the interests of all parties involved with the firm, including employees, customers, suppliers, and the community. These stakeholders all have a vested interest in the company's success.
Additionally, factors such as safety and liability hugely impact managerial decisions. Regulations such as those from the Occupational Safety and Health Administration (OSHA) require firms to provide safe working conditions, which may sometimes necessitate trade-offs with profit-making. Historically, as seen with the Industrial Revolution and subsequent labor reforms, social and political pressures have led to a greater focus on worker welfare over pure profitability.
Lastly, established firms with accessible information about their products, revenues, costs, and profits may attract outside investors such as bondholders and shareholders who base their investment decisions on corporate performance and governance rather than on personal relationships with the managers. This could lead to diversified corporate objectives beyond mere profit maximization, as corporate strategies adapt to serve a broader set of investor interests and risk profiles.