WEALTH MAXIMIZATION

Wealth Maximization

Wealth Maximization

The shareholders are the owners of the shares. The shareholder holding securities representing a share capital of the company, these securities are dematerialized. Shareholders may be individuals or legal entities, they can be individually or through mutual funds mutual funds which is managed by fund managers. The shareholder's right to participate in collective decisions and it is an essential right of shareholders. While a manager is a person who has organizational responsibility, he has the task of guiding others to implement plans and give orders and get things done to meet the true and correct purpose and mission that promotes the organization. Manager as a professionally specialist engaged in managerial activities. Roles performed by managers in managing the organization.

Achieving goal requires speed and strength of harmony and balance, and in turn achieve this harmony and balance requires concentration. (Huseman, 2002, 102)

Ultimate aim of the company and therefore of the whole financial management is to maximize the wealth of the owners for whom they work for. The wealth of corporate owners is measured by the share price, which in turn is based on the timing of returns, their magnitude and risk. In considering each decision alternative in terms of its impact on the price of the shares of the company, financial managers should accept decisions which are expected to increase the stock price. Since the stock price represents the wealth of the owners in the company: maximizing the stock price will maximize the owner's wealth. (Todes, 2007, 106)

Encouragement is the factor that actually drives a person toward the achievement. Recognition is the great motivator because it increases the self-esteem. Shareholders should recognize the achievements of the managers in order to have maximum wealth maximization. (Watson, 2007 65)

Under present conditions the owners actually exercise control over the activities of corporations. On the other hand, managers of companies often are not interested in increasing shareholder wealth, pursuing personal goals, including those due to the lack of benchmarks the effectiveness of their work and adequate motivation to achieve specified targets. (Atrill, 2007, 58)

Formation of the Encouragement system of Shareholders should be focused on achieving four main objectives:

Balancing the interests of managers and shareholders. Remuneration earned by the managers, must depend on the welfare changes of company owners.

Sufficient motivation. Incentives of managers to make efforts to the welfare of the owners of the company (including work harder, take risks, to make ...