How does wealth maximisation goal takes care of conflict between managers and shareholders?

The wealth maximization goal aligns the interests of managers and shareholders by focusing on increasing the company's long-term value, which benefits both parties. When managers prioritize strategies that enhance shareholder wealth, they inherently work towards improved company performance, leading to higher stock prices and potential dividends. Additionally, performance-based incentives for managers, such as stock options, can further align their goals with those of shareholders, reducing conflicts and fostering a cooperative relationship. Overall, this alignment encourages a focus on sustainable growth and profitability, which satisfies the interests of both groups.