Relationship Between Management and Shareholders Financial Essay
The key difference between wealth and profit maximization is that wealth maximization is the long-term objective of the company to increase and thereby increase the value of the company's shares. On the study of stakeholder, shareholder and wealth maximization, V. Sivarama Krishnan, University of Central Oklahoma, 2008, say that the so-called stakeholder theory offers a very different view, which states that the focus on shareholders and the value of companies is lost and that managers must care for all stakeholders of the organization. to the incentives and allocation of decision rights among managers and capital providers, and are concerned with addressing a limited number of agency problems that arise from that relationship. On the other hand, sociopolitical approaches adopt a: It is argued that trust and cooperation are the most important elements in managing stakeholder relationships. Shareholder theory instead places a legal and implied contract form at the center of managing directors' fiduciary duty and shareholders' interests. Stakeholder theory focuses on the social role of business. The vast majority of research on the relationship between corporate governance and strategic management focuses on the impact of corporate governance on strategic management. In this article we propose a cyclical model, emphasizing that strategic decisions can also influence corporate governance by shaping corporate ownership,