Answer to Question #148878 in Finance for Dayan

Question

In recent years there have been a no of environmental pollution and other regulations imposed on business. In view of these changes is maximization of shareholders wealth still a realistic objective. Explain?

Answer 1

Maximization of shareholder’s wealth will always remain a prime and realistic objective for the company. However, today environmental protection activities appear more important than ever, it is viable for all companies to change the term to maximizing shareholders wealth. Thus for the organization to grow sustainably, it is important to satisfy all environmental pollution norms and other regulations. A company that invests time in ecological activities kills two birds with one arrow. The word ‘invest’ is used here because the time and money spent in pursuing environmental protection will pay off in the long run just like an investment. This will benefit society at large.