Goal of financial management

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1. Can the goal of maximizing the value of the stock conflict with other goals such as avoiding unethical or illegal behavior? In particular, do subjects like customer and employee safety, the environment and the general good of society fit in this framework, or are they essentially ignored? Think of some specific scenarios to illustrate your answer.

2. Corporate ownership varies around the world. Historically, individuals owned the majority of shares in public corporations in the United States. In Germany and Japan, however, banks, other large financial institutions and other companies own most of the stocks in public corporations. Do you think the agency problems are more likely to be more or less severe in Germany and Japan than in the United States?

3. In recent years, large financial institutions such as mutual funds and pension funds have become the dominant owners of stock in United States, and these institutions are becoming active in corporate affairs. What are the implications of this trend to agency problems and corporate control?

4. Discuss why is the goal of financial management to maximize the current share price of the company's stock? In others words, why isn't the goal to maximize the future share price?

Reference no: EM131173259

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