Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Noah Schultz, the president and CEO of EnviroSafe Systems, Inc., a waste management firm, was recently hospitalized, suffering from exhaustion and a heart ailment. Immediately

Noah Schultz, the president and CEO of EnviroSafe Systems, Inc., a waste management firm, was recently hospitalized, suffering from exhaustion and a heart ailment. Immediately prior to his hospitalization, EnviroSafe Systems had experienced a sharp decline in its stock price, and trading activity became almost nonexistent. The primary reason for this was concern expressed in the media over a new untested waste management system implemented by the company. Mr. Schultz had been unwilling to submit the procedure to testing before implementation, but he reluctantly agreed to limited tests after the system was operational. No problems have been identified by the tests to date.
The other members of management called a meeting to determine what they should do. Luke Michaels, the marketing manager, suggested that the company purchase a large number of shares of treasury stock. In that way, investors might notice that activity had picked up, and might decide to buy some more shares. This plan would use up most of the company's available cash, so that there will be no money available for a cash dividend. EnviroSafe Systems has paid cash dividends every quarter for over ten years.
Questions:
1. Is Mr. Michaels' suggestion ethical? Explain why or why not.
2. Is it ethical to discontinue the cash dividend? Why or why not?
3. Do you have any other suggestions for management?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Structured Edp Auditing

Authors: Gabriel Rothberg

1st Edition

0534979319, 978-0534979317

More Books

Students also viewed these Accounting questions

Question

5. If yes, then why?

Answered: 1 week ago

Question

6. How would you design your ideal position?

Answered: 1 week ago