Shareholder wealth maximization is the attempt by business managers to maximize the wealth of the firm they run, which results in rising stock prices that increase the net worth of shareholders, according to About.com. The overall valuation of a firm also rises with increases in its share price.Continue Reading
In the case of a publicly held corporation, it is the shareholders whose wealth is maximized by the growth of the firm, according to About. A firm's managers and staff do not profit (aside from their salaries and benefits) from the company's growth unless they own stock in the company themselves. Many companies offer Employee Stock Purchase Plans to encourage employees to benefit from the shareholder wealth maximization their efforts on the job create.
Shareholder wealth maximization differs from profit maximization, explains About.com. Profit maximization does not take into account protecting the company from risk in the way that shareholder wealth maximization does. For example, many big banks seeking profit maximization nearly failed in 2008 because they invested in complex, risky investments that turned out to be toxic, resulting in drastic reductions in their stock prices. They did not adequately factor risk into their investment strategies and failed to practice good shareholder wealth maximization.Learn more about Investing
The shareholder theory is the viewpoint that the shareholders of a company are the primary group the company should be responsible to and as such, should maximize their profits and return a portion to the shareholders as a reward for investing in the firm. In this approach, the duty is to maximize shareholders' returns. The shareholder theory is an idea that has been predominate in American business practices for the last 25 years as of 2015, according to The Economist.Full Answer >
Duke Energy stock splits refer to the several times that Duke Energy has reduced its stock price by doubling or tripling the number of stocks a shareholder owns. As of May 2015, the company has split its stock five times and most recently did a reverse stock split, according to Duke Energy.Full Answer >
Chevron stock dividends are cash payments made to shareholders of the company’s preferred stock. Chevron pays dividends on a quarterly basis, and its board of directors determines the dividend amount, according to the company’s website.Full Answer >
Cumulative preference shares are stocks that pay dividends to shareholders before common stock is paid out. Cumulative preference shares are also considered preferred stock.Full Answer >