Maximizing shareholder’s wealth subject to ethical constraints implies that the actions and decision made by a manager, must, in the end, ensure that the wealth of a shareholder has been fully maximized upon while abiding by a specific code of conduct. In this regard, a manager makes use of the best plans to increase the financial results or the value of the stocks. However, the business must adhere to the ethical constraints (Queen, 2015). Despite the desire to capitalize on an investment, managers should not break the law to do so. There are limitations, as some decisions may be unethical. To prevent fraud, the standards and ethics of business must be maintained. Unethical conduct not only attracts negative publicity but also weakens the level of confidence and trust by shareholders. Therefore, decisions made by the manager must be scrutinized despite the need to satisfy shareholder’s interests.
insiders trading in their firm’s share should be an ethical concern because this
equates to insider trading; as such, a corporate insider has an advantage over
other investors in the market. Further, as an employee, the insider has a fiduciary
responsibility towards the investors (Carroll & Buchholtz, 2015). By being
allowed to trade in their shares, it implies that they may be putting their
interests above the interests of the shareholders or investors. At the same
time, it paves the way for corporate insiders to influence the stock value of
the firm artificially. The only reason that inventors invest their money into
the stock market is that they believe that the stock market is well regulated
by the government. Therefore, anyone with prior knowledge should be barred from
trading shares until such information is made public.
ReferencesTop of Form
Bottom of Form
Carroll, A. B., & Buchholtz, A. K. (2015). Business & Society: Ethics, sustainability, and stakeholder management. Boston: Cengage Learning. Queen, P. E. (2015). Enlightened shareholder maximization: is this strategy achievable?. Journal of Business Ethics, 127(3), 683-694. https://doi.org/10.100