Value maximization as a goal of the firm takes a long-run perspective that focuses on the owners focuses on bondholders focuses on quarterly changes in earnings is an accounting number Larger corporate profit and cash inflows than what had been expected usually: have no effect on die stock price mean a lower stock price mean a higher stock price will reduce the fluctuations of the stock price An example of a principal of a firm is: the eh airman of the board the owner the CEO the agent