Financial Decisions Should Be Consistent with the Goal of Shareholder

question 58

Multiple Choice

Financial decisions should be consistent with the goal of shareholder wealth maximization. However, there may be a divergence between shareholder wealth maximization and the actual goals of management. The primary reason for this is which of the following?

• A) Management wants to ensure good public relations.
• B) The Board of Directors is becoming increasingly uninvolved within the corporation.
• C) Shareholders do not feel that wealth maximization is relevant.
• D) There is a separation of ownership and control in corporations.