Do managers really look after the interest of shareholders, Corporate Finance

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Question:

"The separation of ownership and control of a corporate firm has given rise to what is called ‘a positive and normative divide' in explaining managerial behaviour. For example, 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, community and society. So, there is a presumption that 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:-

(a) Do managers really look after the interest of shareholders?

(b) Should managers look after the interests of shareholders? How would you reconcile the apparent conflict in the above statement?

(c) "Ethics is good for business; it creates shareholders' wealth". Elaborate this statement and provide a relevant example to support your answer.


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