Greyhound Stables, Inc. operates several dog racing tracks throughout the United
ID: 2583656 • Letter: G
Question
Greyhound Stables, Inc. operates several dog racing tracks throughout the United States. Since most facilities are outdoor tracks only, most of the cash receipts for Greyhound are received from April through October. These funds are usually invested in short-term, very liquid investments, such as stocks and bonds. Among the stocks purchased last year, was Servitronics, a company specializing in automatic vending equipment.
The company decided not to sell its Servitronics stock at the end of last year, and has purchased more of the stock this year. The company intends to continue to purchase stock until it holds enough to make a takeover bid for the company. The accountants have been instructed to continue to classify the investment as short-term until the takeover is accomplished, so that less attention will be directed to it. (Presently, Greyhound has no long-term investment in stock at all.)
Required:
1. Is it ethical for Greyhound to attempt to take over another company? Explain.
2. Is it ethical for Greyhound to leave its investment in the short-term investment category? Explain.
Explanation / Answer
1. Certainly yes, The takeover which Greyhound is planning by purchasing more and more stock in Servitronics is ethical. The reason being its goal to build up a portfolio of stock is also ethical. Unethical takeovers are seen as purchasing of assets of company, and then leaving behind the employees jobless, or damaging any related community irreparably.
2. The stock investment no longer meets the criterion for staying in the short term category as Greyhound is planning to takeover the company by buying more and more stocks of it. Hence it would be certainly unethical for Greyhound to continue the classification of stock as a short-term investment. The investment looks as if it should be classified as long-term one, given the facts of the case.
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