Are managers allowed to fratinize with staff?

Only at social events. It is usually frowned upon to mingle with co-workers outside of work; lets say for example, going to a bar and indulging in alcohol for fun. Whatever happens outside of the work place can be brought back to work. IE: If your boss hits on you or another co-worker. Also...mingling outside of work with select people can also imply "work place favoritism". It is best that a manager only goes out with other managers or their own personal friends. Otherwise, it can lead to a lot of bad repercussions.