Shareholders’ Wealth Maximization is the Primary Goal of All Corporations

Maximizing shareholder wealth is the objective of all corporate activity. Executives want to make as much money as possible for the shareholders and increase the value of the company. This however, limits the company's social and community responsibilities. Wealth maximizations primary corporate goal is to maximize profit for their investors and suppliers (external stakeholders) before taking care of the internal stakeholders of the company. I feel it is important for a company to have healthy financials but it is also important to spend some of the profits on their internal stakeholders (employees). The advantages of wealth maximization from the CFO's perspective include increased returns, strategic consistency, and that it avoids emotion and impulse decisions. According to Kokemuller (2018), "Whatever your goal, a clear focus on an overall strategic objective helps you create consistency in business decisions" (para. 3). These help CFO's to stay objective and focus on the business goal at hand. The disadvantages of wealth maximization are it can lead to poor or unsustainable business practices, forgetting about the customer, employment and outsourcing, and corporate involvement in politics. These disadvantageous factors all impact the CFO and the company in a negative way. According to Hamel (n.d.), "Overtime, this can tarnish the reputation of the company and its products, resulting in the opposite of the intended effect by lowering the value of its stock" (para. 3).