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Does profit maximization lead to highest possible share price? why?

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Question added by Siham Amer , Financial Analyst , Noor Al Hikmah Group
Date Posted: 2018/10/23
Frank Mwansa
by Frank Mwansa , ACCOUNTING LECTURER , FREELANCER

Maximization of profit and stock price may not concide in all cases. Profit may be maximized but it may not increase stock prices. For instance ,short term profit can be maximized by reducing R&D expenses and other expenses but this can have long term negative impacts. As such , it necessary to assmue that profit maximization does not necessary contribute to stock price.

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