A Company's Board of Directors Chooses to Provide a Comprehensive

question 86

Multiple Choice

A company's board of directors chooses to provide a comprehensive health care plan for the families of all employees, despite the large cost. They argue that this will not only increase the number of employees who stay with the firm, and thus reduce some costs involved in employee turnover, but also increase the employees' diligence and industry. What general principle is being argued by the board of directors?

• A) In a conflict between stakeholders in a company, the most important stakeholder is not always the stockholders.
• B) Some activities that decrease shareholders' wealth may have intangible benefits which increase the strength of the company overall.
• C) When a conflict of interest arises between shareholders and other stakeholders, in general, the correct solution is the one that creates the greatest good for the greatest number of stakeholders.
• D) Ethical decisions should be assessed on their moral value, not on their value in dollars and cents.

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Definitions:

Hypothesis

A proposed explanation made on the basis of limited evidence as a starting point for further investigation.

Speculation

The act of forming theories or conjectures without firm evidence, often about financial markets or future events.

Cause

A factor or event that brings about an effect or a change in a situation.

Logical Arguments

Reasoning presented in a structured and coherent manner to persuade or explain, based on principles of logic.