Ethics in Merger And Acquisition

Subject: Business

Pages: 1

Format: APA

Academic Level: College

Paper Detail

Please respond in no more than one page

Ethics are a major factor in any business setting, at times they are used inappropriately, and at
times they are not. Consequently ethics and morals tend to be subjective and relevant in a
situational context.
Based on class discussion and research regarding ethics and Mergers and Acquisitions, please
answer the following questions.
1) Explain the three (3) to five (5) major ethical issues in M&A as discussed in class
2) What is ethics in M&A? Is there such a concept?
3) How do you know when there has been a breach of ethical behavior in M&A?

Answer
Ethics are contemporary standards of values that govern the actions and behavior of an individual in the business. In M&A, standards address the cord of conducts necessary for the successful completion the M&A  transactions and human resource integration (Armour, 2002; Birkinshaw et al., 2000). In M&A, several important issues have received sufficient attention as questionable ethical practices.

One has to do with rights of employees affected by the merger and acquisition. As most jobs get shifted during a merger or acquisition, many employees are drastically changed, yet they are expected to carry out their job responsibilities despite threats on their jobs. The interests of most workers are often ignored as they have no part in the takeover decision

The second issue is to do with shareholders. If the shareholders are the beneficiaries of the transaction, then it would appear that they have some responsibilities or obligations attached to these benefits, but little is said about such responsibilities.

There have also been issues to do with tactics companies use when trying to acquire another or when trying to avoid being bought. These include “poison pill” tactics, green-mailing, problems in good-faith bargaining, the granting of lockup options and anti-trust problems.

Other issues include the rights of bondholders on both sides of a merger or acquisition and the question of the rights of the individual stockholders which is often neglected in the face of the institutional shareholder.

Completely ignoring the interest of employees in M&A transaction, use of illegal tactics in trying to win Merger deals are instances of breach of ethical behavior.

Reference

Gregoriou, G. N., & Neuhauser, K. (2007). Mergers and acquisitions: current issues. Palgrave Macmillan.

Morgan, R. B. (1993). Self-and co-worker perceptions of ethics and their relationships to leadership and salary. Academy of Management journal,36(1), 200-214.

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