Describe societys interests can influence financial managers, Financial Management

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Describe how society's interests can influence financial managers.

Sometimes the interests of a business firm's owners aren't the same as the interests of society.  For illustration, the charge of properly disposing of toxic waste can be so high that companies perhaps tempted to simply dump their waste in nearby rivers.  In thus doing, the companies can keep profits high and costs low, and drive their stock prices higher (if they aren't caught).  But, several people suffer from the polluted environment.  This is why we enclose environmental and other similar laws:  therefore that society's best interests take precedence over the interests of individual company owners.

When businesses take a long-term view, the interests of the owners and society often (but not always) coincide.  When companies encourage recycling, sponsor programs for disadvantaged young people, run media campaigns promoting the responsible use of alcohol, and contribute money to worthwhile civic causes, the goodwill generated as a result of these activities causes long-term increases in the firm's sales and cash flows, which translate into additional wealth for the firm's owners.

 


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