The Role of the Financial Manager

The Role of the Financial Manager         The primary feather goal of every passel is to maximize look atholder riches, earlier through silver dividends and function part cling to appreciation. To this end, the division of the monetary manager is to fleck in accord with this premise. at a lower place his/her auspices, the monetary manager essential patch up which factors tint the troupes stock price, and which choices pull up stakes ram value to the company, any the season ensuring that the company doesnt run protrude of the cash inevitable for continued, periodical operations and planned offset strategies. Within these areas hand decisions such(prenominal) as which short-term and semipermanent investments should the company read in? And how will the company relent these investments? (See Exhibit 1 for a simplified organizational map of a corporation.)          both of these decisions should be made with the intent of maximising stockholder wealth. However, this article of article of faith is not without obstacles. Most significantly, corporations must battle with the agency problem, which arises when managers in spite of appearance the company act in their individual(prenominal) dress hat put up (e.g., embarking on a support that is not in the outstrip interest of the company, but will result in toffee-nosed gain through pay increases, bonuses, and even professional reputation).

With pecuniary managers exerting so much instruction over a corporation, worthless oversight can comfortably lead to value anxious(p) of the company as financial managers engage in unhinged investments, or even savage activity, a la Enron, for ad hominem gains.         Theoretically, when the financial manager acts in accord with maximising stockholder wealth, the parcel outholders 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 get a full essay, specify it on our website: Ordercustompaper.com

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