Government Regulations and a Stockholders' Wealth

Paper Summary:

Maximization of stockholders wealth is a controversial objective, which is often viewed with skepticism by economic analysts and business experts. This paper discusses how it is generally believed that such an objective is rather unrealistic and cannot be achieved keeping the current regulations in view. It questions whether government imposed regulation in various areas, directly affect profitability and business operations. Some studies suggest that these regulations have a negative impact on stockholders wealth while others refute such claims. In this paper, the writer addresses these issue to find out if stockholders wealth is affected by regulations and if so, how.

From the Paper:

"For maximization of stockholder wealth, a corporation needs to retain control over its operations and the measures adopted for increased profitability. However this is only a fairytale situation, which is close to impossible in a country marred by a long list of regulations. Government imposes various kinds of regulations to protect American public from possible exploitation. However what it may not understand is the fact that not all but some of these regulations negatively affect profitability which in turn hurt stockholders wealth. (Whiteman-Jones, 1994)"

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