shareholder maximization is when a corporation focuses on mostly short-term success in order to please the shareholders. As well as their executives who have stock ownership and stock options as incentives for their stocks to do well. Ultimately, maximizing shareholder value is achieved by increasing the stocks price over time and increasing dividends. While its important to have positive results of a companys stock price but its important for the company to consider the employees and their customers. According to the stakeholder theory, managers are agents of all stakeholders and have two responsibilities: to ensure that the ethical rights of no stakeholder are violated and to balance the legitimate interests of the stakeholders when making decisions (Smith, 2003).

Scandals at Enron, Global Crossing, ImClone, Tyco International and WorldCom, concerns about the independence of accountants who are charged with auditing financial statements, and questions about the incentive schema and investor ... have all provided rich fodder for those who question the premise of shareholder supremacy (Smith, 2003). In some cases, businesses partake in illegal or unethical activities, such as falsifying financial information in order to improve shareholder value. There can be negative consequences for the consumer when a corporation only focuses on maximizing the shareholder value. For instance, a corporation may choose to cut production costs by using lower-quality materials. While this may increase profits in the short-term, it may reduce profits in the long-term because the consumers are not satisfied with the quality of the products.

Required

compare and contrast the above view on shareholder maximization with your own. Support your position by offering a counterpoint or resources from which your peers can derive additional knowledge.