“The separation of ownership and control of corporate firm has given rise to what is called ‘a positive and normative divide’ in explaining managerial behaviour. For instance, in the case of corporate restructuring, it is believed that whilst decisions are taken to maximise shareholders’ well-being, there is loss caused to workers, society and community. So, there is a presumption which maximising the well-being of shareholders and maximising social responsibility are two conflicting goals.”
Required:
Support your answer to the following questions with appropriate arguments, school of thoughts and evidence:-
Question1. Do managers really look after the interest of the shareholders?
Question2. Should managers look after the interests of shareholders? How would you resolve the apparent conflict in the above statement?
Question3. “Ethics is good for business; it creates shareholders’ wealth”. Explain this statement and provide a appropriate example to support your answer.