Learn It: Business Judgment Rule

Managers $($such as the officers and directors of a corporation$)$ have a duty to protect the interests of the shareholders of a corporation and the corporation itself. But, sometimes, those in charge of managing a business make a bad decision. That does not mean the person was intentionally trying to harm the business, but this mistake could result in significant financial losses. If a manager were held personally responsible for every negative outcome, no one would want to be a manager. That being said, a corporation cannot operate if managers are allowed to make wildly inappropriate decisions that drive a company