Start networking and exchanging professional insights

Register now or log in to join your professional community.

Follow

Why in general do financial managers make financial decisions in a corporation, rather than the owners making these decisions themselves?

A) It is best for the control of the finances of a corporation to be in the hands of a disinterested third party.

B) The interests of the various owners may conflict with each other.

C) The owners may not be U.S. citizens or residents.

D) There are often many owners, and they can often change as they buy and sell stock.

user-image
Question added by Sultan Alghamdi
Date Posted: 2016/02/11
Md Saadat Hossain
by Md Saadat Hossain , Ex. Branch Manager , BRAC Bank Ltd

Finance managers can handle surround limitations along with profit maximization. 

Amaechi Priscilla
by Amaechi Priscilla , stock controller , cema communications limited

in general , financial managers do not make financial decisions rather they give thier contributions or suggestions then the company with other company's manager will deliberate and come to a conclusion.

Dilip Basnet
by Dilip Basnet , "The Owner" , Self-Owned Commercial Online Venture

Finance Managers are hired through the extensive screening process and they are expected to be an independent and highly skilled professional executors. The owners appoint them to take perfect decisions based on their qualification and the experience. 

Well, in general, applicable to all types of organization, Finance Managers take the decisions but he/she has to take consultation and get the owner or the representative of the owner (Director or the MD) well informed. Being that, the owners of the public company appoint the management committee who has to perform for their profit maximization and the organizational wel-being, the financial managers are basically delegated to take decisions within a certain standard. 

Lets consider an example; when a company declares not to declare dividend this year but take a major project investment then, the basic root of the decision will have been priorly suggested by the finance manager but he alone wouldn't be authorized to make that investment decision without the dividend addressed to the owners which is always been expected. It is the decision sanctioned through the general meeting. The budget for the coming financial year is allocated and that portion of financial resource is what the finance manager does his part.

Summary: Finance Managers do not actually, in general make financial decisions in a corporation. It is always an act of coordination among different depart heads. He/She has to work under the General Manager and is subject to controlling and make suggestions on the financial affairs, and only permitted with a decision making up to the constraint served. This is a vast issue. I could write an article for this.. haha!

Thanks for the question.

Ahmed Alkhateb
by Ahmed Alkhateb , Independent Accounting , Self employed

The answer is D. 

Ownership changes every time with buying and selling the stocks 

There are often many owners, and they can often change as they buy and sell stock

Deepsikha Lama
by Deepsikha Lama , Admin and Finance Assistant , Amrit Boarding School

It is best for the control of the finance to be in the hands of those who are independent to company's financial status. Also not necessarily that the corporation owners are finance specialists to direct the company's financial direction in an appropriate way.

More Questions Like This

Do you need help in adding the right keywords to your CV? Let our CV writing experts help you.