(Answered) : 9. Do ethics play a critical role in the financial manager’s goal of shareholder wealth maximization? How are the two related?

9. Do ethics play a critical role in the financial manager’s goal of shareholder wealth maximization? How are the two related? Is the establishment of corporate ethics policies and guidelines, requiring employee compliance, enough to ensure ethical behavior by employees?

Expert Answer

Ethics play vital role in financial managers goal of shareholder wealth maximisation. The major reasons are

It act as afoundation block of developing trust between both parties
It helps in understanding the gaps and real objectives can be defined from it
Wealth maximisation is possible only through sustainable and trustworth way of investment which ensure long run for the benefit.
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