Role of the Financial Manager - 1139 Words

Role of the Financial Manager Paper Introduction Shareholders own companies and are therefore entitled to a return on their investments when the companies are performing well. It becomes the financial managers role to ensure that shareholders are receiving a maximum return on their investment. This project will concentrate on defining the different roles and objectives of financial managers in their attempt to maximize shareholder value. Furthermore, the viewpoint of stockholders will also be compared to those of financial managers with regards to maximization of shareholder value. Maximizing Shareholder Value In today s competitive global environment, financial managers are continually faced with the ability to engage in†¦show more content†¦Some individuals with large shareholdings may try to influence company policies. However, from the outside, without an accepted official position, little can be accomplished in spite of considerable effort if management is not persuaded (Kouskoula, 1998). From a shareholder s viewpoint, not having any influence on companies may lead to conflicts of interest. For instance, shareholders could fear that some managers may seek to use the shareholder s money for their own personal gains. When faced with such principal-agent problems, it becomes the role of senior management to find ways to motivate everyone else in the company. At that point, senior management become the principals and junior management and other employees are their agents (Brealey et al., 2005). Shareholders maintain a perspective of a growing co mpany in order to receive a return on their investment, therefore increasing their value. Their viewpoints could be considered more narrowly personally beneficial on a financial aspect than the viewpoints of a financial manager. Conclusion The main goal of financial managers is to maximize shareholder value. Besides being strategy implementers, their role also includes finding ways to increase the firm s capital budgeting, financing, and net working-capital activities. Furthermore, financial managers need to maintainShow MoreRelatedRole of Financial Manager1220 Words   |  5 PagesRole of the Financial Manager The role of the financial manager has changed drastically during recent years. Previously, financial managers were seen as the stewards of the organization, since they were responsible to ensure the accountability of all organizational assets and to generate accurate financial reports. Today, their main goal is to maximize shareholder value. 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