Is the goal of zero profits for some finite period consistent with the maximization of the shareholders wealth?

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2026-07-13 10:15

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Yes, the goal of zero profits for a finite period can be consistent with the maximization of shareholders' wealth if it is part of a strategic plan aimed at long-term growth and market expansion. For instance, a company might invest heavily in research and development or lower prices to gain market share, leading to temporary zero profits. If these investments result in significant future cash flows and increased market value, they ultimately enhance shareholder wealth. Thus, short-term sacrifices can align with long-term objectives.

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