Why is profit maximization by itself an inappropriate goal W

Why is profit maximization, by itself, an inappropriate goal?

What is meant by the goal of maximization of shareholder wealth?

Solution

1.

one of the goal of management is to maximum the profit of company. but profit maximization itseld is not appropriate for comapny and its shareholder. Sometime management maximize the profit by earnings management or sale of assets but it is not sustainble.

2.

Goal of financial management or finance manager in either private company or public company is to maximize shareholder wealth. Increase shareholder wealth mean increase the stock price of equity, earning per share of company, so that the stockholder who is real owner of company, wealth will increase.