An ethical manager is considering multiple investments for a firm. The different investments pay different amounts in 1 year. Which of the following investments should the manager choose:

A.) Pays the firm $500k and pays the manager $100k

B.) Pays the firm $100k and the manager $500k

C.) Pays the firm $400k and the manager $400k

D.) Pays the firm $700k and the manager $100k

E.) None of these answers

The correct answer is E.

None of these answers

Explanation:

According to corporate and business ethics , one cannot make any income for self from business transactions.

A manager is an employee of the company, and according to the agency concept, manager is the agent of the company. He can make investments on the behalf of the company, if authorised to do so, in accordance with his employment contract. The company will be liable to remunerate the manager. It is the manager's fiduciary duty to act in the company's best interests, ahead of its personal interests. This situation is clearly a conflict of interest situation, where he should act in the company's interest, not in his personal interests. All of the options, except for E, will be satisfying his personal interests.

Option D may look ideal but it is also incorrect as the manager is still earning $ 100K. ideally manager should have zero income for investments made on behalf of firm if he goes by ethics.

Therefore none of the answer is correct.

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