Question

What is the concept of maximization of shareholder wealth?

1) A concept that focuses on increasing the value of a company's stock for the benefit of its shareholders
2) A concept that aims to maximize the financial returns for the company's management
3) A concept that prioritizes the interests of employees over shareholders
4) A concept that emphasizes the social responsibility of the company

Answer 1

The concept of maximization of shareholder wealth focuses on increasing the value of a company's stock for the benefit of its shareholders.

Step-by-step explanation:

The concept of maximization of shareholder wealth refers to the goal of increasing the value of a company's stock for the benefit of its shareholders. Shareholders, also known as stockholders, are individuals who own a share of a corporation and invest capital in the company. When a company is profitable, shareholders receive a positive return on their investment. This concept prioritizes the interests of shareholders over other stakeholders such as employees, customers, and communities.