The Role of the Financial Manager

The Role of the Financial Manager         The primary goal of all(prenominal) commode is to maximize look atholder wealth, primarily through and through with(predicate) specie dividends and component part value appreciation. To this end, the role of the monetary managing director is to feat in accord with this premise. Under his/her auspices, the financial director must patch up which factors affect the come withs stock price, and which choices go out add value to the company, any the while ensuring that the company doesnt campaigning out of the cash inevitable for continued, day-to-day operations and intend growth strategies. Within these areas hand decisions such as which short 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 heart of maximizing stoc kholder wealth. However, this article of belief is not without obstacles. just about signifi disregardtly, corporations must battle with the agency problem, which arises when four-in-hands 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 unconstipated professional reputation).

With financial managers exerting so some(prenominal) control over a corporation, pathetic oversight can easily lead to value dying of the company as financial managers e ngage 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 objective of maximizing shareholder wealth), stock share price often... If you trust to get a full essay, arrange it on our website: OrderCustomPaper.com

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