THE ROLE OF FINANCIAL MANAGEMENT IN MAXIMIZING SHAREHOLDER VALUE

Abstract

This paper examines the principles of corporate finance and their impact on the maximization of shareholder value. Financial management plays a critical role in ensuring the success of a business and achieving the ultimate goal of maximizing shareholder wealth. The article discusses the concept of discounted cash flow analysis, which is a fundamental principle of finance that allows companies to evaluate investment opportunities and make sound financial decisions. In addition, the paper examines the importance of capital structure, including the use of debt and equity financing, and the effect of dividend policy on the value of the firm. The article also highlights the role of financial markets in providing necessary capital to businesses and enabling efficient allocation of resources. Overall, the principles of corporate finance are essential for any business to thrive, and understanding these concepts is crucial for financial managers to make informed decisions that maximize shareholder value.