Question
1. Suppose a publicly traded firm's management determines that it will spend half of its free cash flow on social causes (saving rain forest; increase
1. Suppose a publicly traded firm's management determines that it will spend half of its free cash flow on social causes (saving rain forest; increase the availability of the arts to the economically disadvantaged, etc.). The decision does not result in any economic benefit that accrues to the firm. What might the current owners or outsiders interested in maximizing value do?
a. increase the amount spent on social causes
b. bid up the price of the stock based on the firms performance
c. Fire the current management and/or buya controlling interest in the firm.
d. Buy other stocks
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