Goal of the Corporation

Stockholders are the owners of a corporation. They purchase stocks because they want to earn good return on their investment without undue risk exposure. Stockholders select directors who then hire managers to run the corporation on a day-to-day basis. Managers are supposed to be working on behalf of stockholders. So, financial managers need to know what are the major objectives of a firm's owners. Stockholders want to maximize their value of investment in a corporation. So, the primary goal of the corporation is to maximize stockholder's wealth. But many people believe that the owner's objective is always to maximize profit.