JUSTIFYING SHAREHOLDER WEALTH MAXIMISATION Alan D Morrison Programme Director‚ The Oxford Finance Programme for Senior Executives; Professor of Finance‚ Saïd Business School CORPORATE OBJECTIVES AND CORPORATE FINANCE The Role of the Corporation Corporate fi nance is the branch of economics that concerns itself with the ways in which corporations fi nance their activities. If we want to think clearly about this topic‚ we need a simple model of the corporation. Figure 1 is about the simplest
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The word ‘Hypothesis is derived from a Greek word‚ which means ‘to suppose’. It is usually considered as the principal instrument in research. For a researcher it is a formal question that he or she intends to resolve. In this way a hypothesis may be defined as a proposition or a supposition. The main function of hypothesis is to guide the collection and processing of materials and direct the research. Hypothesis is a tentative conclusion. It is facts based theory. A research scholar will analyze
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step 2: The hypothesis Answer the following questions: * What is a hypothesis? * How is a hypothesis different from a theory in science? * Describe an example of how you may use the scientific method in your daily life and state a good hypothesis for that example. * Which hypothesis did you first pick in the "Recognizing a good hypothesis" activity in the scientific method tutorial? Why? If any‚ which mistake(s) did you make when picking a hypothesis? A hypothesis is a specific
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SHAREHOLDER WEALTH MAXIMISATION: SUMMARY ‘Business Finance’ assumes that the objective of a company is to maximise shareholder wealth. This means that companies should attempt to maximise the value of the shareholders’ investment in the company. This is achieved by maximising ‘Total Shareholder Returns’: dividends and share price appreciation. The most powerful basis for understanding and measuring shareholder wealth is the ‘economic valuation model’‚ under which the value of the shareholders’
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29‚ 2012 Martha Nussbaum: “Not for Profit: Why Democracy Needs the Humanities” Martha C. Nussbaum is the author of the book‚ “Not For Profit: Why Democracy Needs the Humanities.” The book begins by drawing the reader’s attention by explaining the “Silent Crisis.” She describes education in the eyes of the government‚ and in the eyes of the people. There is a connection made between education and the liberal arts. The title of the book‚ “Not For Profit‚” are three simple words that when put
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000($970‚000-$177‚000). The total implicit cost is $190‚000($175‚000+.15X$100‚000). The total economic costs is $983‚000($793‚000+$190‚000). b. The accounting profit in 2010 is $177‚000($970‚000-$793‚000) c. The economic profit in 2010 is $-13‚000($970‚000-$793‚000-$190‚000). d. The owner should not leave his job because the economic profit is negative‚ which means he will earn less if he does his own business. 2. a. The type of agency problem that is involved here is principal-agent problem. Marriott
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Profit vs. Not-for-Profit Organization A nonprofit organization is formed for the common good of the public. Nonprofit organizations are usually formed for some specific religious‚ charitable or educational purpose. A for-profit organization may be formed to conduct any number of lawful business activities. The primary reason to form a for-profit organization is to earn a profit for the owners of the company. Use of Profits Since a not-for-profit organization is formed to accomplish a specific
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MM Hypothesis – A Critique The assumptions of MM hypothesis are unrealistic and untenable in practice. As a result‚ the conclusions that dividend payment and other methods of financing exactly offset each other and hence‚ the irrelevance of dividends‚ is not a practical proposition; it is of merely theoretical relevance. The validity of MM approach is open to question on two counts: 1. Imperfection of Capital market 2. Resolution of uncertainty Market Imperfection MM assume that capital markets
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Nonprofit versus For-Profit Healthcare and Organizations Abstract This paper explores articles and research conducted on nonprofit versus For-Profit Healthcare and Organizations. There are three types of entities that own hospitals‚ which are: nonprofit‚ for-profit‚ and government. However‚ it can’t be determined if they specialize in different medical services or how their service profits affect certain specializations. More than likely‚ the for-profits offer profitable medical services that
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Non-Profit vs. For-Profit The main difference between non-profit and for profit healthcare organizations are; Non-profit hospitals don’t need to pay property‚ sales or income taxes and receive grants from the government and through donations. They were designed to provide discounted fees for service or no fee to those in the surrounding communities with limited to no funds for healthcare‚ basically the poor or those who fall within the guidelines of those below poverty level. The tax exemptions
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