Stockholder Wealth Maximization
Stockholder wealth maximization is a main goal for firm’s managers in corporate finance. Stockholder wealth maximization is above the profit maximization because of long term orientation and better risk management.
To maximize investors value many things has to be done. Wealth maximization includes sales maximization, EBITDA maximization, net profit maximization, sustainability assurance, growth possibilities, optimal risk management, optimal capital structure and other.
Stockholder wealth maximization is measured by stock price on the exchange. Of course, the stock price also depends on investment market moods and cycles, but it’s not hard to compare company’s stock price performance to the main competitors’ of the same industry stocks price benchmark.
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