Abstract
The most important objective for a financial manager is to maximize the wealth of the shareholders. Hundred of years ago, most of the companies were owned by a small group of shareholders, so making the financial decisions were easy. But nowadays companies are owned by diversified shareholders and so the control is separated from the ownership to another 'agent'. Decision-making about the corporate strategy are delegated under the authority of the financial manager. For example, if the manager wants to invest in news cars, it shows that the company is doing well but it will not maximize the shareholders wealth. As a result, shareholders are using different process in order to motivate managers to operate more in their direction. In this essay, we will highlight on three methods used to align managers behaviour to shareholders interest for their wealth maximization.
