Ritically assess how finance managers can, in practice, contribute to the maximisation of shareholder wealth


Financial management practice and theory covered in this module focuses on how we can increase shareholder wealth.

In order to satisfactorily complete this assessment you are required to write an integrated essay titled:

 Critically assess how finance managers can, in practice, contribute to the maximisation of shareholder wealth .

Maximum word count 2,000 words. There must be a bibliography and no appendices are allowed.

The learning outcomes addressed by this essay are 1,2 & 4 (see module document p.2) so it is essential that your essay specifically covers:

a) The financial management function and how it contributes to the maximisation of shareholder wealth.

b) An evaluation of Risk and Return theories and measurement models.

c) The sources of long, medium, and short-term finance available to international businesses. Describe how such finance is obtained and evaluate the relevance for associated capital structure and dividend decisions.

It is not necessary to explain in detail how finance is raised in the markets but you must cover how decisions on types of finance, working capital, capital structure and dividends may impact on shareholder value.

d) How investment decisions are made and an evaluation of relevant techniques and theory. Cost of capital is clearly integral to this.

So what are we expecting from you?

An integrated essay explaining how all the various theoretical and practical aspects of financial management come together to maximise shareholder wealth. We are not expecting a debate about whether shareholder wealth maximisation should be the main objective. The emphasis here is on the word integrated. Financial management is one topic and we are not expecting one short paragraph relating to each topic. You must demonstrate that you understand how everything fits together.

We are expecting you to use your own words and you will not be credited with uncritical inclusion of text from books and other sources.

Whilst the focus of your essay is on how the finance manager can  in practice increase shareholder value we are looking for you to demonstrate this within the theoretical concepts outlined in the module.

We must also stress that it is your responsibility to ensure that you cover all the learning outcomes identified above. Omitting any one of them means that you have not achieved the module learning outcomes that in turn means your essay will fail.

You will receive sufficient from Arnold, lectures and seminars to write this essay but to get into the 60%+ ranges you will need to demonstrate wider reading including Journals.

Font size must be 12 and there is the normal +/10% on the 2,000 word limit that excludes the bibliography. There must not be any appendices. If you include any appendices they will not be read.

The key to success

The emphasis on shareholder wealth maximisation (i.e. creating value) cannot be stressed enough. For everything you discuss you must demonstrate your understanding of how it impacts on shareholder value. The other key word is integration. This module is not made up of a series of separate subjects; they are all connected. Likewise your essay should not be made up of a series of independent discussions on various topics. You need to demonstrate a holistic understanding of the subject by showing the linkage between each of the topics that you raise. Your success is therefore dependent as much on the structure of the essay as on the content. You will fail if you do not demonstrate how the finance manager can create value and do not integrate the various components.