Class Notes (834,026)
Canada (508,290)
Accounting (779)
ACC 333 (82)
Jian Guan (35)


1 Page
Unlock Document

ACC 333
Jian Guan

In much of economic theory, it is assumed that a business aims to maximise profits. In reality, most businesses which are run for “commercial gain” do have profit maximisation as an important objective – since the shareholders have taken a risk investing in the business and require a return (profit) to compensate them for their risk. There are, however, many other potential financial objectives of a business. The table below summarises three alternative models of business objectives that have attracted popular support: Sales Maximisation Model (Baumol) This model argues that businesses try to maximise sales or revenues rather than profits. There are several possible motives for such an objective: • Grow or sustain market share • Ensure survival • Discourage competitors (particularly new entrants to a market) • Build the prestige of the senior management – who like to be seen running a large rather than a particularly profitable business • Achieve bonuses – if these are based on revenues rather than profits Management Discretion Model (Williamson) In this model, Williamson argues that management act to further their own interests – in other words to achieve person
More Less

Related notes for ACC 333

Log In


Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.