Why is wealth maximization used as the goal

Reference no: EM13778686

Maximizing long-term cash flows rather than managing for short-term earnings, even in an earnings-dominated market, is the most effective means of creating value for continuing shareholders. The governing objective of managing in the interests of continuing shareholders justifies this conclusion. And the conclusion holds even for companies that engage in significant transactions in their own stock."

Why is wealth maximization used as the goal for financial decisions?

Reference no: EM13778686

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