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The goal of the firm is to create value for the firm's owners (that is, its shareholders). Thus the actual goal is to maximize shareholder

The goal of the firm is to create value for the firm's owners (that is, its shareholders). Thus the actual goal is to "maximize shareholder wealth" by maximizing the price of the existing common stock. However in some situation management may make decisions that are not consistent with the goal. For instance, management decided that the profit for this year reinvested in the company. Based on the situation, briefly explain which principles of finance that the management violated.

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