The role of financial managers , business and finance homework help

Question 5 (20 Marks)

Corporate ownership varies around the world. In the US, individual investors own most of the shares in public listed firms. However, in Germany, the majority of shares in listed firms are owned by investment banks and other large financial institutions. Which country do you think has more severe agency problem? Discuss the reasons why and explain. (Word limit: 400 words, excluding references)

Question 6 (10 Marks)

The role of financial managers is maximizing shareholders’ wealth. In order to achieve this, a financial manager would like to increase the firm’s stock price. Therefore, the goal of financial managers is to maximize the current share price. If we assume that the financial market is efficient, why is the goal of a financial manager to maximize the firm’s current share price rather than future share price? In other words, are there any differences between the goal of maximizing current share price and the goal of maximizing future stock price? Discuss the reasons why. (Word limit: 300 words, excluding references)

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