The Role of the Financial Manager

The Role of the Financial Manager         The primary goal of all(prenominal) commode is to maximize look atholder wealth, primarily by money dividends and component part value appreciation. To this end, the role of the monetary managing director is to act as in accord with this premise. Under his/her auspices, the financial managing director must patch up which factors affect the societys stock price, and which choices go out add value to the company, any the while ensuring that the company doesnt triumph out of the cash inevitable for continued, day-to-day operations and plan growth strategies. Within these areas hand decisions such as which short and long-term investments should the company read in? And how will the company finance these investments? (See Exhibit 1 for a simplified organisational chart of a corporation.)          both of these decisions should be made with the look of maximizing stockholder wealth. However, this ar ticle of belief is not without obstacles. more or less signifi providetly, corporations must battle with the agency problem, which arises when passenger cars inside the company act in their individual(prenominal) dress hat stake (e.g., embarking on a project that is not in the best interest of the company, provided will result in private gain finished pay increases, bonuses, and pull down professional reputation).

With financial managers exerting so oft control over a corporation, pathetic oversight can easily lead to value dying of the company as financial managers engage in wild investments, or even cr iminal activity, a la Enron, for personal ga! ins.         Theoretically, when the financial manager acts in accord with maximizing shareholder wealth, the shareholders benefit through cash dividends and share price gains. With value to employees, however, maximizing shareholder wealth is not always in their best, personal interest. For example, when a company announces a layoff to cut be (which, for illustration, we assume is with the intent of maximizing shareholder wealth), stock share price often... If you indigence to get a full essay, arrange it on our website: OrderCustomPaper.com

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