In practice financial managers should make decisions that are consistent with the primary objective of maximizing shareholder wealth, yet whether this philosophy is consistently applied is open to debate. Critically evaluate and analyse the differing ways in which the shareholders of a company can encourage its managers to act in a manner that does align with the objective of maximizing shareholder wealth. Within this section of the assessment students should demonstrate knowledge, understanding, and an ability to critically evaluate agency theory, and the pivotal role it plays within financial management. The response should clearly identify techniques that can be implemented and used by shareholders to address and reduce the agency problem that is faced by many businesses. A critical evaluation of relevant, contemporary academic literature should be performed, rather than placing an over emphasis upon overly describing the core concepts. Evaluation and integration of real-life examples where shareholders have actively attempted to address or reduce agency problems would assist in developing and enhancing the response offered. (50%) Guidance: Students should approach the written elements of this assignment as an academic essay, weighing the arguments for and against each issue, making comment on the literature and drawing logical conclusions. Academic referencing using the Harvard referencing approach is a key requirement of the assignment to demonstrate wider reading and to underpin the discussions, ensuring they have relevant depth. Marking Guide The learning outcomes for this module assessed by this piece of work are: Knowledge 1. Examined and critically evaluated the key strategic decisions that a business may have to make and appreciated how accounting and finance can assist in making and evaluating those decisions. 2. A critical understanding of specific analytical skills in key decision areas within strategy and finance at local and international level 3. A critical understanding of the limitations of the current state of financial theory in making strategic business decisions Skills 4. Applied the key valuation concepts and methodologies of financial decision making in order to contribute to the wider decision making of the organisation