Michelson was chairman of the board and chief executive officer of a computer manufacturing firm.When considering whether to purchase CompuPrint,the manufacturer of computer printers,Michelson examined CompuPrint's financial records,consulted with legal and financial experts,and conducted an in-depth study of the marketplace and decided that it would be profitable for his corporation to purchase CompuPrint.If CompuPrint turns out to be a poor investment,and a court hears a case challenging Michelson's decision,the court will most likely analyze his conduct based on the ________ rule.

A) business judgment
B) insider trading
C) fairness
D) shareholder protection

Question

Alyda Bailey · Accepted Answer

Final Answer : A, Explanation :  The business judgment rule is a legal principle that assumes business decisions made by corporate officers and directors are made in the best interest of the corporation and its shareholders. As long as the decision-making process is conducted in an informed and reasonable manner, and is within the scope of the corporation's authority, the court will defer to the business judgment of the corporate officers and directors. Therefore, if a court were to hear a case challenging Michelson's decision to purchase CompuPrint, they would likely apply the business judgment rule to analyze his conduct.

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