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Essay / Research Paper Abstract
This 4 page paper looks at how shareholder wealth maximization may manifest in a firm, the paper looks at the concept of shareholders wealth maximization and consider the way it can be assessed, using General Motors as a firm that adopts this model. The bibliography cites 7 sources.
Page Count:
4 pages (~225 words per page)
File: TS14_TEmaxshare.rtf
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Unformatted sample text from the term paper:
the practices need to be considered against theory. Using a company such as General Motors this approach can be demonstrated. The school
of shareholder wealth maximisation sates that it is the shareholder who is the principle concern of the organisation (Dobson, 1999). A proponent of this school of thought was Milton Freidman,
a highly regarded economist, capitalist and Nobel prize winner. Friedman had a simple view on the responsibility of a company (Chryssides et al, 1999). Friedmans argument was that business have
only one social responsibility and that is the responsibility to their shareholders or owners; the increasing of their profits (Chryssides et al, 1999). Milton Friedman was a capitalist and
an unwavering supporter of Laissez faire capitalism, which is freedom from intervention of any sort save that of force in the preservation of freedom (Chryssides et al, 1999). The
effect of this statement is obvious; it denies that there is any further responsibility save that of the owners of the business (Chryssides et a, 1999, Dobson, 1999). This argument
is not quite as simple as it seems. It does not deny the existence of social responsibility, but places a very specialised perception on it; After all a business with
no social considerations will not necessarily be maximising its profits, as many people might object on social or ethical grounds to its behaviour. Therefor, if it is needed to demonstrate
a social conscience in order to gain additional business and maximise the returns then it is permissible (Dobson, 1999). However an altruistic approach is unacceptable as this may be a
waste of resources that might otherwise be used more profitably. When Freidman argues for this singular approach to profit maximisation it is not
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