The Stakeholder Theory Maintains That

question 69

Multiple Choice

The stakeholder theory maintains that:

• A)Companies have ethical responsibilities to all members of society,which allow corporations to exist based on a social contract
• B)Managers are agents of the stockholders,and their only ethical responsibility is to increase the profits of the business without violating the law or engaging in fraudulent practices
• C)Managers have an ethical responsibility to manage a firm for the benefit of all individuals and groups that have a stake in or claim on a company
• D)Managers are agents of the customer,and their only ethical responsibility is to increase the service of the business,without violating the law or engaging in fraudulent practices

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Definitions:

New Ventures

Businesses or projects initiated by entrepreneurs, often characterized by innovation, high risks, and high rewards.

Opportunity Costs

The cost of forgoing the next best alternative when making a decision, representing the benefits one could have received by taking an alternative action.

Sunk Costs

Expenses that have been spent and cannot be retrieved.

Cash Flow Estimation

This refers to the process of forecasting and evaluating the amount of cash that is expected to flow into and out of a business over a specific period.