The main and foremost objective of financial management is to maximise the wealth of equity shareholders. The financial manager of a company takes this decision because the shareholders are the owners of the company, financial decisions taken will determine the manner in which the funds are invested. The return earned on investment will determine the value and price of the shares. The market price of the shares will increase if the benefit from the decision has exceeded its cost.
Secondly, the objective of increase in value of equity shares automatically fulfills many other objectives like, increasing the profitability, maintaining liquidity, effective utilisation of funds and providing for growth of the company.