Ethics and Firm Goals
Can our goal of maximizing the value of the stock conflict with other goals, such as avoiding unethical or illegal behavior? In particular, do you think subjects like customer and employee safety, the environment, and the general good of society fit in this framework, or are they essentially ignored? Try to think of some specific scenarios to illustrate your answer.
Through maximizing the value of stock other goals could most
certainly be ignored (unethical behavior, employee safety, etc.).
Companies such as Enron, WorldCom, Tyco, and Adelphia all had
issues develop because of more emphasis being put on the
maximization of market value and value of stock. I’ll use Enron as an
example, through use of accounting loopholes, special purpose entities, and poor financial reporting, Enron was able to hide billions of dollars in debt from failed deals and project from their board of directors and auditing committee. This is an example where many executives used
unethical/illegal behavior to further the company. This caused
many of Enron’s shareholders to become affected and file a $40
Get Answers For Free
Most questions answered within 1 hours.