Two corporate managers are discussing the effect of market efficiency on their firms. You are required to critically evaluate the two statements as follows. In particular, please discuss the two statements with your team mates and write an essay about which one of the statements you agree or disagree.

Manager A: “Shareholders will never know our capital budgeting decisions.”

Manager B: “We cannot fool shareholders and the market. The market and shareholders will punish the company if bad capital budgeting decisions are made.”

Answer rating: 100% (QA)

Both Manager A and Manager B express contrasting views on the transparency and consequences of capital budgeting decisions in relation to shareholders ... View the full answer