Answer:
According to finance theory, firms should attempt to maximize the long term price of the firm's common stock. The benefit to this objective is that it provides the best financial outcome for the firm's shareholders .
Explanation:
Finance theory distinguishes between profit maximization and wealth maximization.
Profit maximization is considered to be a narrow concept as it is only concerned of activities by which a company can maximize it's gains at any cost.
Wealth maximization takes into account taking care of the interests of stakeholders which include a company's shareholders. When emphasis is laid upon wealth maximization of shareholders, profits are automatically taken care of.
Shareholder's wealth maximization is one of the aims of financial management as it's a broader concept.
