A Perceived Effect

In reading our third chapter, I came across a topic of conflict of interest and how "private interests or personal considerations may affect or be perceived to affect and employee's judgment to act in the best interests of the organization".

This idea of a "perceived" effect on an organization and/or a single person in that organization interests me. Does it mean, then that just because it seems to others that I may have a conflict of interest, that I am doing wrong ethically? 

For example:
My cousin owns a company that produces milk.  I am a manager at a small grocery chain.  I am given the task of deciding what products we use to stock our shelves and have been looking at milk producers.  Once I go through the numbers, I find that my cousin's product truly is the best for our store - price, quality, etc.  Is it ethically wrong for me to go ahead and suggest that the chain choose her milk product(s)?  Would it be wrong ONLY if I did not disclose our relationship? 

My opinion is that I should disclose the relationship AND lay out all of the findings for those people making the final decision.  Allow them the opportunity to send in someone else to check up behind my research. 

Is this idea of a negative perception most dangerous, then, for the outer public?  And, thus, can become a harmful perception of the organization as a whole?

I think that must be the main point behind it because there are situations in which the conflict-of-interest decision may very well be the right one.