Corporate Governance Shareholder Wealth Maximization Research Paper

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Communities are looking for social expenditures by the business to benefit the community (hospitals, stable employment, donations, and investments). Managers face a challenge in making such crucial decisions. Therefore, corporations must be clear on how to make tradeoffs between these often inconsistent and conflicting interests from different stakeholders.

In the Shareholder Wealth Maximization model, three types of maximization exist in a company. They include total stakeholder maximization, shareholder maximization and stakeholder-owner maximization. Shareholder maximization is based on a single stakeholder maximization whereby the sole business owner is taken into account during maximization. The stakeholder owner maximization focuses on desired interests and resources important for shareholders commitment. It is crucial for the overall success of the business venture (Tricker, 2012).

Of all the three-wealth maximization of companies, shareholder wealth maximization is more significant than the other two. While most businesses presume total stakeholder maximization to be the most significant role, it is never easy to achieve this maximization.

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In my topic, businesses are being encouraged to consider stakeholders' interest during the process of decision-making. During this process, conflicts of interests emerge due to stakeholder and shareholder interest rivalry (Tricker, 2012).

This article supports my topic because it concludes by recommending businesses to embrace the stakeholder capitalism approach. It is obvious that not only investors, owners and managers have the ability to share profits but also workers, individual interest groups, and suppliers are connected to the firm. The stakeholder capitalism model ensures that employees are consulted in profit distribution and management decisions. This promotes a cooperative relationship between the management and employees translating to a steady productivity and sustainability of the business (Moffett, Stonehill & Eiteman, 2012)......

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