Shareholder Wealth Maximisation

This refers to the business approach to decision making that focuses on increasing the net value of the business, to the benefit of its owners.

In a perfect market, Shareholder Wealth Maximisation is demonstrated by increases in the share price of the business, although this can also be influenced by external factors such as the state of the national economy. Ideally a shareholder wealth maximisation strategy is in line with the long term business strategy for future success, however in some cases it can be seen to focus on short term gains for shareholders which might restrict future growth and development.

Shareholder Wealth Maximisation is a term normally found in economics and financial management; explore our learning resources to discover more. Explore our learning zone to discover more