Question

In: Finance

To what extent do you think distorted information has an impact on business and social decision...

To what extent do you think distorted information has an impact on business and social decision making and understanding the world?

Solutions

Expert Solution

Distorted information can turn out dangerous, especially certain important decisions are based on such information. Under business decision making, lot of decisions taken by both top and executive managers are based on the information provided by the financial statements and other external as well as information which are made available to them. If such information are distorted and are not complete in nature, then managers might end up taking bad decision for the organization over time. For example, if the information regarding net credit sales was distorted and management decides to opt a liberal credit policy, it can have a considerable impact on the profitability and efficiency of the firm. At the same time business decisions taken by firm considering external environment information like economy, finances etc. may impact firm;s growth and profitability over time.

Social decision making is rests with those who are charged with governance of the state or society in general. Their job is based on information provided to them, they aim to take best possible decision for the society after analyzing and judging the information provided to them, however, if the information provided itself was wrong and distorted, the decisions taken will also prove hazardous and wrong for the health of society. For example, decision taken by government or government official for implementation of a housing policy can have a considerable impact on the sector, if the data of housing market obtained was not fresh and was of previous years etc. Therefore, distorted information is very dangerous both for business and society in general.

Hence it can be concluded that accurate and ethical information is necessary for business and social decision making in the longer run, also it helps in better understanding of the world in which we live.


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