A firm's operating goal should be to maximize shareholder wealth as it is shareholders who are the owners of the firm profit maximizing however is more of a personal/manageme nt oriented type goal as it only benefits those running the company.
Shareholder wealth maximization is considered to be a more appropriate goal for the firm than profit maximization - answered by a verified tutor. The goal of wealth maximization a better operative criterion than profit maximization as- wealth maximization ensures fair return to the shareholders and their interests are equally taken care of whereas no such thing is thought of, under profit maximization.
Profit vs wealth maximization is a common but crucial question the ultimate goal of financial management is to maximize the wealth of its shareholders. Shareholder is defined as an individual or corporation owns one or more shares of stock in a company because the goal of shareholder wealth maximization is a long term goal achieved by many short-term decisions to maintain or exceed the expected value of shareholders because serving the interests of stakeholders can create profit for.
Wherever funds are involved, financial management is there there are two paramount objectives of the financial management: profit maximization and wealth maximization profit maximization as its name signifies refers that the profit of the firm should be increased while wealth maximization, aims at accelerating the worth of the entity.
Answer \nthe goal of maximization of shareholder wealth is meant by first, in most cases enlightened management is aware that the only way to maintain its position o ver the long run is to be sensitive to shareholder concerns poor stock price performance relative to other companies often leads to undesirable takeovers and proxy fights for control.