Question

In 200 words 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 in corporate finance? Think of some specific scenarios to illustrate your answer.

Answer 1

Maximizing the value of stock over a long run is what requires sustainable value addition where as a short spike in value can be easier to bring but will not last long.

Maximizing the value of any stock is taylored with expert synchronization of Human capital , Natural Resource capital , and Intellectual Capital .

Unethical behaviour using jobbers or manipulativedevices or circulating rumours would in short do hike the value but would surely reduce the real Investor's confidence in the stock which in turn means a high VWAP , a high turnover and too much of volataility. Illegally having Price sensitive unpublished information relating to the stock can spurt immediate confused demand and kill the rationale sense at once .

For example , Recently Elon musk , CEO@Tesla had made an abrupt comment in public TALKING ABOUT TESLA GOING PRIVATE . That single comment shot up the stock price by 20 % in a trading session . But as soon as the news confirmed that Mr.Musk wasn't very serious with what he stock the price tumbled . This is what happens in short run where the value addition means are either illegal or unethical .