A corporation that operates ethically will notice certain benefits as it applies to shareholder wealth maximization

Marketing Dec 28, 2020

A corporation that operates ethically will notice certain benefits as it applies to shareholder wealth maximization. With shareholder wealth maximization in mind, all of the following could be experienced by an ethical corporation except:

A) The corporation can expect to have reduced litigation expense.

B) The cooperation can expect to have greater agency costs.

C) The corporation can expect to have reduced damages expenses.

D) The corporation can expect to have a more favorable impression by customers and investors.

Expert Solution

The answer is B.

If a corporation is operated ethically, it would be able to balance or avoid the conflicts between groups of stakeholders, including the conflicts between business owners and managers. Alternatively, an ethical business should expect a lower degree of agency conflicts.

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