Regarding the objectives of financial management, there are three representative views: profit maximization, shareholder wealth maximization, and enterprise value maximization. Although they respectively reveal the essence of corporate financial management from a certain level, they reflect corporate management Each point of view has its own reasonable features and requirements, and has a certain application in practice, but the author believes that these financial management goals, which are purely for the purpose of pursuing economic benefits, are contrary to sustainable development strategies. Below are the limitations and problems of financial management goals.
I.) Views on "profit maximization".
The view of profit maximization is the theoretical basis of western microeconomics, and it is also a widely popular view in China, which has the greatest impact on the practice world. Generally speaking, no matter what type of enterprise is the organization of production and operation activities for the purpose of profit, the pursuit of the maximum benefit is the realistic goal of every company competing in the market economy. It is used by many companies as a financial management goal. Its merit. With the continuous deepening and development of the reform of the market economy system in China, the investment entities of modern enterprises have become diversified, and the scale of enterprises is constantly changing. If pure profit maximization is taken as the financial management goal of an enterprise, the following deviations will occur: (1) The profit in profit maximization is the profit realized in a certain period of time. It does not consider the size of the enterprise, the time value of funds and cash flow, and it does not effectively reflect the risk. It may lead to the blind pursuit of the largest regardless of the size of the risk. Profit; (2) One-sided pursuit of profit maximization often results in companies only caring about current profits, neglecting efforts in environmental protection, product development, human development, production safety, and fulfilling social responsibilities, leading to short-term behavior of the company, which is not good for the company Long-term healthy development; (3) One-sided pursuit of maximizing profits can sometimes worsen corporate financial relationships, such as profiting for the sake of profit, infringing on the interests of employees, creditors, consumers and the state.
II.) Opinions on "Maximizing Shareholder Wealth"
The maximization of shareholders' wealth means that through reasonable operation, the company adopts a scientific financial management strategy, and takes into account the time value of funds and the value of risk to bring the most wealth to shareholders. In an economy with a shareholding system, shareholder wealth is determined by the number of shares it owns and the market price of the shares. When the number of shares is constant, the greater the stock market price, the greater the shareholder wealth, so that the shareholder wealth is maximized and evolves into the stock price. maximize. In joint-stock enterprises, maximizing shareholder wealth as a financial management goal is conducive to overcoming short-term behavior of the company in pursuit of profit, but there are also some practical obstacles to this goal: (1) China's current capital market, especially the securities market, has just In the initial stage, securities transactions were not standardized, and the stock price was difficult to reflect the true value of the enterprise; (2) The proportion of listed companies was low. For non-listed companies, how to measure shareholder wealth lacks a uniform standard; (3) The goal of maximizing shareholder wealth only considers the interests of shareholders, and does not consider the role of other property rights entities on the company, especially environmental protection liabilities caused by the destruction of the natural environment , Played down the social responsibility that enterprises should bear.
III.) Opinions on "Maximizing Enterprise Value"
Enterprise value maximization refers to maximizing the market value of all assets of an enterprise. When the market evaluates enterprises, what they value is not the level of profit that the company has already obtained, but the potential profitability of the company. Therefore, the enterprise value is not the total value of the book assets, but the market value of all the assets of the enterprise, and it reflects the potential or expected profitability of the enterprise. When evaluating the value of an enterprise, investors use the investor's expected investment time as a starting point and discount future income in the same caliber of the expected investment time. The future income is calculated based on the probability that it can be realized. But it also has certain limitations: (1) maximizing the value of an enterprise is a very abstract and difficult to determine specifically. For a non-listed company, its future value can only be determined through asset evaluation. This evaluation is affected by evaluation standards or methods, so it is difficult to determine accurately; for a listed company, its value can be determined by the stock price. Changes are reflected, but because changes in stock prices are not the only reflection of company performance, but a comprehensive result of the impact of many factors, it is impossible for the level of stock prices to reflect the value of listed companies; (2) maximizing corporate value in practice May lead to conflicts between business owners and other stakeholders. An enterprise is an ownership enterprise, and its value is ultimately owned by the owner. Therefore, the goal of maximizing the value of the enterprise is the interest objective of the enterprise owner. It cannot satisfy the wishes of all stakeholders, such as the profit concept of the operator and the creditor. Risk concept, corporate social responsibility concept and so on.