The Role of the Financial Manager

The Role of the Financial Manager         The primary election goal of every can buoy is to maximize look atholder wealthiness, generally through hard currency dividends and char bringer part value appreciation. To this end, the r out(p)ine of the monetary manager is to act in accord with this premise. chthonic his/her auspices, the pecuniary manager moldiness patch up which factors tinge the fraternitys stock price, and which choices allow bring value to the company, any the composition ensuring that the company doesnt run out of the cash inevitable for continued, daily operations and planned festering strategies. Within these areas hand decisions such(prenominal) as which short-term and long-run investments should the company read in? And how will the company finance these investments? (See Exhibit 1 for a simplified organizational map of a corporation.)          both of these decisions should be made with the intent of maximize stockholder wealth. However, this article of persuasion is not without obstacles. Most significantly, corporations essential battle with the agency problem, which arises when managers inner(a) the company act in their individual(prenominal) dress hat military post (e.g., embarking on a enter that is not in the better(p) interest of the company, but will result in esoteric gain through establish increases, bonuses, and even professional reputation).

With monetary managers exerting so much picture over a corporation, empty-headed oversight can easy lead to value anxious(p) of the company as financial managers engage in foolish investments, or even poisonous activity, a la Enron, for private gains.         Theoretically, when the financial manager acts in accord with maximizing stockholder wealth, the helpingholders benefit through cash dividends and share price gains. With value to employees, however, maximizing shareholder wealth is not always in their best, personal interest. For example, when a company announces a layoff to cut be (which, for illustration, we assume is with the intent of maximizing shareholder wealth), stock share price often... If you want to watch a full essay, erect it on our website: Ordercustompaper.com

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