Is shareholder wealth maximisation goal a short or long term goal?

Answer 1

It's supposed to be a long term goal; but in the current markets short-term prices can raise stock values and get manager bonuses so they may bet tempted to go for more short term goals. Same thing for anyone preparing to sell their business and, for example, retire. Short term profits might get you a higher sal price, but the new buyer might find that that was at the cost of long term profits. For instance you raise short term profits by producing cheaper quality stuff at the same price, but lose customers for new owner down the road.

Answer 2

I believe shareholder wealth is very important in both short-term and long-term.

But, if you have opportunities to use funding to capitilise projects that have proven inflows of cash, management would probably go ahead with the project- delay dividends for the year to undergo the project and as a whole produce a higher:

-Cash inflow

-Stock price

-Possible dividends for the future years.

Therefore I believe short-term financing should be used to increase shareholder wealth in the long term as it is far more beneficial for both parties.

Answer 3

The goal of the corporation is profit maximization. It is both a short-term and long-term goal. However, this lends to myopic thinking on the part of most CEOs since they could be fired in the short-term for foregoing short-term gains to invest in long-term assets that will be a competitive advantage to the company.