What is Shareholders wealth?

sarahjones99 · #1 Feb 21, 2006, 05:27 PM

Hi, I do not understand what maximizing shareholders wealth is? What is it? How does a corporation do it? What are some ways to maximize shareholders wealth?

Thanks a lot!

Jabberwock · Mar 2, 2007, 02:34 AM

Shareholders' wealth is basically the wealth shareholders get to accrue from their ownership of shares in a firm. Shareholders's wealth increases by 2 possible means: either by increase in share prices that bring about capital gain or increase in dividend payments. Knowing this fact, a firm can maximize shareholders' wealth through this way. However, an optimal point needs to be struck as a firm needs to balance the risk and return involved.

Shareholders' wealth is also known as shareholders' value. Hope this is the answer you desired.



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