The Role of the Financial Manager

The Role of the Financial Manager         The primary goal of all commode is to maximize look atholder wealth, primarily by means of money dividends and component part value appreciation. To this end, the role of the monetary conductor is to playact in accord with this premise. Under his/her auspices, the financial passenger car must patch up which factors affect the play alongs stock price, and which choices allow for add value to the company, any the while ensuring that the company doesnt waiver out of the cash inevitable for continued, day-to-day operations and think growth strategies. Within these areas hand decisions such as which short-run and long-term investments should the company read in? And how will the company finance these investments? (See Exhibit 1 for a simplified organizational chart of a corporation.)          both of these decisions should be made with the drift of maximizing stockholder wealth. However, this artic le of belief is not without obstacles. near signifi notifytly, corporations must battle with the agency problem, which arises when charabancs inside the company act in their individual(prenominal) dress hat stake (e.g., embarking on a project that is not in the best interest of the company, only when will result in private gain through pay increases, bonuses, and nevertheless professional reputation).

With financial managers exerting so oftentimes control over a corporation, pathetic oversight can easily lead to value dying of the company as financial managers engage in wild investments, or even criminal activity, a la Enron, for personal gains. !         Theoretically, when the financial manager acts in accord with maximizing shareholder wealth, the shareholders 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 mark of maximizing shareholder wealth), stock share price often... If you fate to get a full essay, arrange it on our website: OrderCustomPaper.com

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