Which of the Following Actions Is Consistent with Social Responsibility

question 80

Multiple Choice

Which of the following actions is consistent with social responsibility but is necessarily inconsistent with stockholder wealth maximization?

• A) Investing in a smokestack "scrubber" to reduce the firm's air pollution as mandated by law.
• B) Voluntarily installing expensive machinery to treat effluent discharge which currently is being dumped into a river where it is ruining the drinking water of the community where the plant is located.
• C) Investing in a smokestack filter to reduce sulphur-dioxide emissions in order to reduce the current tax being levied on the firm by the state for its pollution.
• D) Making a large corporate donation to the local community in order to fund a recreation complex that will be used by the community and the firm's employees.
• E) Each of the above actions is consistent with social responsibility and none is necessarily inconsistent with stockholder wealth maximization.

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Definitions:

Correlation Coefficients

Correlation coefficients are statistical measures that quantify the degree to which two variables change in relation to each other, indicating both the strength and direction of this relationship.

Concurrent Validity

The extent to which test scores correlate with scores from other related measures assessed at the same time.

Discriminant Validity

The extent to which a construct is truly distinct from other constructs by correlating weakly with variables from which it is supposed to differ.

Predictive Validity

The extent to which a score on a scale or test predicts future performance on a related outcome.