Critical Examination of Shareholder Wealth Maximization in Business

This essay critically examines the concept of shareholder wealth maximization in business, considering the ethical and societal responsibilities of corporations. The analysis begins with an introduction highlighting the importance of balancing profit with ethical considerations, referencing the Joyner and Payne (2002) quotation emphasizing the symbiotic relationship between business and society. The essay then delves into the shareholder wealth maximization model, arguing for the integration of corporate social responsibility (CSR) and stakeholder engagement for long-term viability. It references recent journal articles to support the argument that companies should consider the well-being of society and not solely focus on profit maximization. The conclusion emphasizes the need for businesses to adopt ethical practices and consider the broader impact of their actions on the economy and society, advocating for a balanced approach that incorporates moral obligations alongside shareholder wealth maximization. The essay emphasizes the importance of integrating external market considerations and the ethical treatment of employees in corporate strategies. The analysis is supported by the review of relevant journal articles to highlight significant dimensions that should be integrated into a business venture's constructive policy. The paper thereby was formulated to account the mitigation of the associated risks, incorporation of the engagement of the shareholders in the wealth maximization aspect and the enlightenment of the efficient utilisation of the resources in the operations of the varied departments.

Business

ABSTRACT
This analysis will try to explain the significance of shareholder's wealth maximisation
conception on the basis of this very famous quotation, “The view of pursuing shareholder
wealth alone, of course, is not the approach most ethicists or (now) most businesspeople take.
The realization has occurred that businesses must participate in society in an ethically
symbiotic way, A fundamental truth is that business cannot exist without society and that society
cannot go forward without business. Thus, business must acknowledge society's existence and
society's growing demand for more ethically responsible business practice.” Joyner and Payne
(2002). The study will thereby highlight the critical scrutiny of this subject matter with the help
of influential journals.

Table of Contents
INTRODUCTION ...........................................................................................................................................4
Shareholder's wealth maximization.........................................................................................................4
CONCLUSION ..............................................................................................................................................5
REFERENCES................................................................................................................................................7

INTRODUCTION
The conception of the shareholder's wealth maximization is significant for the successful
conduction of the businesses but certain other criterion are also there which must be taken into
consideration for the enlistment of the corporation in the external market. The social
responsibilities must be taken into account and the aspect of excessive greed should be neglected
and the the sole objective of an institution should not only be the acceleration of the stock values,
but rather the goals should also encompass the social and moral facets (Sharfman, 2022). This
report will thereby prove to be an aid in order to comprehend towards the idea of the influential
quotation discussed in the abstract of the study.
Shareholder's wealth maximization.
The recognition in regards to the aspect of the ethics and the moral obligations that must
be incorporated in the business's policies has been widely accepted in the modern day business
cultures. The emphasis should be upon the corporate social responsibilities, integration of the
values and the management of the businesses principles. According to (Chauhan, 2022), in his
research paper, Paradigm shift from shareholders to stakeholders primacy model, the
associations of the relationship of the business ventures with the stakeholders of the company is
imperative to maintain in order to bring about certified viability to the businesses and the
development of the institutions. The negligence of the shareholder's primacy model along with
the completion of the CSR by the company is a a must for the effective and smooth running of
the corporation. In the primacy model, the interests of the shareholders are considered to be the
only and the supreme goal of the corporates, in order to generate the maximum amount of
benefits for the company. This particular conception can help in the generation of valuable
profits but would not let the institution survive in the external market for a substantial period of
time. The company should look beyond the ideology of the self recentness and must consider the
accounts of the well bring of the society as a whole. The interrelation of the construct of CSR in
an intrinsic manner must be the suitable approach to consolidate in the functioning of a
company. In regards to (Ellsworth, 2022), Capital-Market Relationships: The Myths of
Shareholder Wealth Maximization. In Leading with Purpose (pp. 145-181), the purpose of the
corporates should be upon the competitive advantage, executive leadership and the production of

the goods and service in respect to supreme quality and not just profit maximisation. The
strategical formulation of the company should take care of the comprehensive perspectives rather
than the inclusion of myopic thinking for the provision of secure aid to the managers of the
corporation. The concerns of the external market considerations is the epitome of this study
along with proper and accountable treatment of the employees in the company. The actions of
the institutions should be in accordance to the stakeholders of the company and the peculiar
needs and requirement must be integrated in the management of the corporate venture. Also,
(Rose, 2022), Regulating Strategic Sovereign Wealth, tried to showcase the corrective
mechanisms to be taken into account for the effectual corporate governance of the companies.
The costs and the benefits associated with the company must be significantly analysed and the
scrutiny of the synchronised involvement of the stakeholders with the shareholders should be
present in order to achieve the standardised targets in a deliberative manner. The regulations of
the risks associated with the activities of the company must be examined and certified measures
to advent the scope of the jeopardy must be intricately taken care of. The generation the wealth
in regards to the optimum utilisation of the resources in an ecological manner must be the
standard that should be ascertained by the companies in order to bring sovereignty in the
functioning (Watson, 2022). The paper thereby was formulated to account the mitigation of the
associated risks, incorporation of the engagement of the shareholders in the wealth maximization
aspect and the enlightenment of the efficient utilisation of the resources in the operations of the
varied departments. The research papers that are discussed in the study thereby helps in the
highlighting of the significant dimensions of the external considerations that should be integrated
in the constructive policy of a business venture. This would prove to be an aid in the effective
and efficient attainment of the determined targets and the objective of the corporations.

CONCLUSION
An inference can thus be made that the toxic aspect of the investments laid down by the
corporate institutions which could have an adverse impact upon the functionality of the economy
and disrupt the social dimensions of the external market should be taken into significant
consideration and measures must be adopted in order to bring viability and comprehensiveness in
the operations of the businesses. The lags present in the pathway should not become a stringent
hurdle and the facet of wealth maximization of the shareholders must incorporate the social
moral obligations as well.

REFERENCES
Books and Journals
Chauhan, D., 2022. Paradigm shift from shareholders to stakeholders primacy model. Available
at SSRN 4146726.
Ellsworth, R.R., 2022. 5. Capital-Market Relationships: The Myths of Shareholder Wealth
Maximization. In Leading with Purpose (pp. 145-181). Stanford University Press.
Rose, P., 2022. Regulating Strategic Sovereign Wealth. Available at SSRN.
Sharfman, B.S., 2022. Opportunism in the Shareholder Voting and Engagement of the ‘Big
Three’Investment Advisers to Index Funds. Available at SSRN 3995714.
Watson, S., 2022. Can the Modern Corporation Operate Sustainably?. Chapter, 9.