Ethics of stock option backdating
Any decision that the company makes is likely to have an effect on its performance an in turn will affect the price of its shares in the stock exchange. Aside from moral concerns on the part of the businessmen, various factors that translate to financial gains are driving companies to be more conscious of its treatment of its employees and to be more generous to the public.
It turns out that observance of business ethics result to an increase in the quality of job performance and consumer preference towards the company's services.
These were reduced by the resent changes even though more ethical issues a rose.
It’s thus paramount for more moral laws to be put in place to control the ethical issues in the stock option control.
All this ethical issues of stock option handling needed to be looked upon for moral reason.
Due to the many short comings of the old ways through which stock options were handled, new changes were made that could reduce the unethical issues that a rose and enhancing of doing the right things for the right reasons.
Such values are computed using complicated option pricing models such as the Black-Scholes option pricing model. Question #4 Changes in a company's stock price have no impact on the financial statements of that company.
It was for the good intent but led to emergence of ethical issues through mischievous ways of backdating and re-pricing of the stocks option.
According to Kantian, it is possible to develop moral system using reason and this could be a great basis for controlling the ethical issues that a rises[sam02].
Body The share based payment and stock options were compensation expense based on the fair value for both the company and the beneficiaries based on the stock market price on the grant date.
Arguments regarding the necessity of briberies and gift giving are also discussed and argued against using evidences from research studies.
Analysis leads to the conclusion that observance of business ethics is not optional... Over the past few months, triggered by a study by Erik Lie and Randall Heron in late 2005, many companies have been scurrying to conduct independent internal investigations on stock option backdating or came under the scrutiny of the Securities and Exchange Commission (SEC).