The Primary Goal of Investor-Owned Firms Is Shareholder Wealth Maximization

question 3

True/False

The primary goal of investor-owned firms is shareholder wealth maximization, while the primary goal of not-for-profit firms is typically stated in terms of some mission; for example, to provide health care services to the communities served.

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Definitions:

Common Stockholders

Individuals or entities that own a portion of a corporation's equity and have voting rights based on their share ownership.

Shares Outstanding

The total number of shares of a company's stock that are currently owned by investors, including those held by the public as well as restricted shares owned by the company's insiders and employees.

Treasury Stock

Shares that were issued and subsequently reacquired by the issuing corporation, reducing the amount of outstanding stock on the open market.

Cash Dividend

The distribution of some of a company's earnings to its shareholders as determined by the company's board of directors.