Different interest in firms
- creditors
- Employees
- Customers
- Society
- Shareholders
- Managers
Whats the conflict between interests and their objectives?
Which interests are to have their objective maximized and which are merely to be satisfied
Perspective - Pro capitalist economists
The purpose of the firm is the owners
Perspective - Left wing
Primacy of workers rights and rewards
Perspective - Balanced stakeholder approach
A balanced view between the claimants
Possible objectives
- Achieving a target market share
- Keeping employee agiation to a minimum
- Creating an ever-expanding empire
- Maximisation of profit
- Maximisation of long-term shareholder wealth
What is shareholder wealth?
- Can be defined as maximising shareholders purchasing
- Or maximising the flow of dividends to shareholders through time
What is corporate governance?
The system by which companies are managed and controlled, its main focus is on the responsbilities and obligations placed on the executive directors and the non-executive directors and on the relationships between the firms owener etc
The role of the financial manager
Is to use capital from investors to use in the firm for ex a new machine, this gives profit where the money is kept in the company, pay of creditors or given back to the investors
What is the role of financial intermediaries?
To facilitate the flow of funds from primary investors to ultimate borrowers at a low cost
