Treasury StockEthics is Kenseth president of Sycamore Corpor

(Treasury Stock-Ethics) is Kenseth, president of Sycamore Corporation, Is concerned about several large stockholders who have been very vocal lately in their critidsms of her leadership. She thinks they might mount a campaign to have her removed as the corporation\'s CEO. She decides that buying them out by purchasing their shares could eliminate them as opponents, and she is confident they would accept a \"good\" offer. Kenseth knows the corporation\'s cash position is decent, so it has the cash to complete the transaction. She also knows the purchase of these shares will increase earnings per share, which should make other investors quite happy. (Earnings per share is calculated by dividing net income available for the common shareholders by the welghted-average number of shares outstanding. Therefore, if the number of shares outstanding is decreased by purchasing treasury shares, earnings per share increases.) Instructions Answer the following questions Who are the stakeholders in this situation? What are the ethical issues involved? Should Kenseth authorize the transaction?

Solution

If we talk about the stakeholder then dissident stockholders are stakeholders. Potential investors, Kenseth, and creditors are other stock holders. Honesty, personal responsibility to other and honesty are ethical issues involved here. She has information about the corporation, she is also authorized to buy back, and these elements can benefit her. She have desire to use stock purchase this can eliminate the dissident stockholders. It is the prime responsibility of a corporate leader is that he/she should think about the corporation rather than thinking about herself/himself. The purchase of buy-back can harm the company. Its effect will be in future. So she should think about the future of the company. The financial position should be strengthened. She should think that buy out will be good for all parties or benefit only her?