Which of the following is an example of a business’s ethical obligation to its stakeholders?

• A. Maximizing profits at any cost
• B. Providing accurate and transparent financial statements
• C. Delaying the disclosure of negative financial information
• D. Ignoring environmental regulations to reduce expenses

Answer: (B)

Verified step by step guidance

1. Understand the concept of ethical obligations: Ethical obligations refer to the moral responsibilities a business has towards its stakeholders, including employees, customers, investors, and the community. These obligations often involve honesty, transparency, and adherence to laws and regulations.
2. Identify the stakeholders in the scenario: Stakeholders include anyone affected by the business's actions, such as shareholders, employees, customers, and the broader community. Ethical obligations ensure that the business acts in their best interest while maintaining integrity.
3. Analyze the options provided: Evaluate each option to determine whether it aligns with ethical practices. For example, 'Maximizing profits at any cost' may lead to unethical behavior, while 'Providing accurate and transparent financial statements' aligns with ethical obligations.
4. Consider the importance of transparency: Providing accurate and transparent financial statements is a key ethical obligation because it ensures stakeholders can make informed decisions based on truthful information. This builds trust and maintains the integrity of the business.
5. Eliminate unethical options: Options such as 'Delaying the disclosure of negative financial information' and 'Ignoring environmental regulations to reduce expenses' are unethical because they involve deception or harm to the community. The correct ethical obligation is 'Providing accurate and transparent financial statements.'