Journal of Research in National Development

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Financial Management Practices, Wealth Maximization Criterion and Firm Value: An Empirical Analysis

PO Eriki, EJ Idolor, IL Eghosa


In the field of financial management, shareholders wealth maximization is often seen as the desirable goal not only from the shareholders perspective but for the society at large; with the firm’s primary goal aimed mainly at maximizing the wealth of its shareholders. This study thus aimed at determining the impact of the core financial management decisions or functions on firm value or shareholders wealth. The study adopted the use of the Ordinary Least Squares (OLS) multiple regression and correlation matrix to ascertain the relationship between shareholders value and the core financial management decisions/functions. The results of our findings in the correlation matrix revealed that all the financial management practices were negatively correlated with shareholders wealth or firm value while the OLS multiple regression revealed that dividend decisions and investment decisions were the two variables that exert significant influences on shareholders wealth or firm value.

Keywords: Financial, management, shareholders, firm, value

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