Question

What do you think about the following statement - "Tobacco companies should maximize stockholder wealth. Increased sales resulting from nicotine-spiked cigarettes will increase sales and cash flows, and presumably the stock price. Therefore, in the interest of maximizing value, tobacco companies should spike their cigarettes."

Answer 1

This is a statement that is focused at companies being socially responsible and protecting the interest of the various stakeholders so this is a statement which is focused at tobacco company doing ethical business because of introduction of nicotine based cigarettes.

This statement will focus upon the need for the tobacco company to operate ethically as it is indulged in a production of such product which is going to harm the the future of various youths and those who are its consumers, so this statement is focused at a way of amending the operation of this tobacco company by introduction of ethical nicotine based cigarette will be helpful for the shareholders to curb up their addiction for cigarettes.

So this is a statement for ethical consideration in the company's strategy to maximize the shareholders wealth and company's value.