When Maximizing Shareholders' Wealth Is Not the Only Choice

This article presents an empirical analysis of the financial behavior of Slovenian firms. It focuses on the goal of the firm, capital budgeting, capital structure, and dividend-payout decisions. Three theories of financial behavior, neoclassical, post-Keynesian, and employee governance, with three different goals of the firm, maximization of share value, maximization of long-term probability of survival, and maximization of wages, provide the theoretical background. A sample of fifty-one important Slovenian firms is analyzed using the data from a questionnaire for chief financial officers and from financial statements. Two additional samples of listed and privatized firms are analyzed through financial statements only. We conclude that the average investigated Slovenian firm is still governed by employees, as it was before privatization, its primary goal is maximization of wages, it does not have net capital investment, it is financed predominantly by equity, and it pays very low dividends