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This post addresses the ethics of financial struggles.

Some companies struggle to pull themselves out of financial difficulty and end up getting in deeper and deeper, while others might cut their losses as soon as it is evident that they are in trouble.

Which tactic seems more ethical to you? Does a company have a responsibility to their shareholders to try to turn things around or is it better to cut their losses before it is too bad?

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In my opinion, it is more ethical to cut losses as soon as it is evident the company is in trouble primarily because the company has a responsibility to their shareholders. On the average, if the company is that far into trouble to the point of having to decide if they should stay in business or not, it's not going to turn around. There have been thousands of ...

Solution Summary

The solution provides a detailed response to the question that states, Some companies struggle to pull themselves out of financial difficulty and end up getting in deeper and deeper, while others might cut their losses as soon as it is evident that they are in trouble. Which tactic seems more ethical to you? Does a company have a responsibility to their shareholders to try to turn things around or is it better to cut their losses before it is too bad?

This solution is written based on 25+ years of professional experience in the accounting and finance industries.

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