Goals of the Corporate Firm

What is the primary goal of the corporation? The traditional answer is that managers in a corporation make decisions for the stockholders because the stockholders own and control the corporation. If so, the goal of the corporation is to add value for the stockholders. This goal is a little vague and so we will try to come up with a precise formulation. It is also impossible to give a definitive answer to this important question because the corporation is an artificial being, not a natural person. It exists in the "contemplation of the law."4

It is necessary to precisely identify who controls the corporation. We shall consider the set-of-contracts viewpoint. This viewpoint suggests the corporate firm will attempt to maximize the shareholders' wealth by taking actions that increase the current value per share of existing stock of the firm.

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  • celina muganda
    what are the goals of any corporate firm
    8 years ago

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