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:

Par Value

The face value of a bond or stock as stated by the issuer, which may differ from its market value.