Society's interests can influence financial managers.

Question

Society's interests can influence financial managers. Explain.

Answer 1

Sometimes the interests of a business firm's owners are not the same as the interests of society.  For example, the expenditure of appropriate disposing of toxic waste can be so high that organisations may be tempted to simply dump their waste in nearby water resources.  In so doing, the organisations can keep costs low and profits high, and make their stock prices higher. So we have environmental and many similar laws:  So that society's best interests take precedence over the interests of individual company owners.
When businesses consider a long-term view, the interests of the business holder and society often coincide.  When companies supports recycling, sponsor programs for underprivileged young people, run media campaigns promoting the responsible use of alcohol and also funds the worthwhile civic causes, the goodwill generated as a result of these activities causes long-term increases in the firm's sales and cash flow, and it is converted into additional capital for the firm's owners.