please give an example of an action that might increase short-run profits but at the same...
please give an example of an action that might increase short-run profits but at the same time reduce stock price and the market value of the firm. Also, please discuss why the value maximization goal of corporate management is not inconsistent with ethical behavior.
Homework Answers
Solution :- Suppose the company making shirts having a good image using a quality product starts using cheap products in making shirts in this case the firm might increase his short run profits as by reducing some prices not as much as compared to reducing in quality wich leads to more sale at that time but when the customer awares about it then the value of the business decrease and then leads to reducing stock price which also means total market value of the firm.
The value maximization goal of corporate management is not inconsistent with ethical behavior because ethical behavior includes making some financial decisions related to ethical expenses which are not providing monetary benefits
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please give an example of an action that might increase
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