Shareholder and corporate wealth maximization

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The primary goal and in effect the only goal of the management at United States publicly held company is to maximize the wealth of their shareholders. This type of management is called the Shareholder Wealth Maximization (SWM) model. SWM is very popular in the U.S. On the other hand, there are people who may argue that a company's goal should also include its entire stakeholders including employees, creditors, suppliers, the local community, etc. This thinking is referred to as Corporate Wealth Maximization (CWM) model - which is prevalent in Japan and many European countries. In a paragraph or two outline your opinion on this issue. Specifically, explain which model leads to increased economic efficiency? Explain your answer?

Reference no: EM1378543

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