Question

Explain why investors and the financial community are concerned with business ethics and social responsibility.

Accepted Answer

The main reason why investors and the financial community are concerned about this is because it can affect the profitability of a business.
Investors are, of course, looking to invest money in profitable businesses.  They want to ensure that they will get a good return on their investment.  Businesses can be harmed by the perception (whether accurate or not) that they are not ethical or socially responsible.  If a firm is hurt in this way, it may become less profitable as consumers shy away from it.  If this happens, investors can lose money.  For this reason, they are concerned about firms’ ethics and social responsibility.

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Explain why investors and the financial community are concerned with business ethics and social responsibility.

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