Question

You are the CEO of a corporation whose board has just decided to cut the dividend to the stockholders. This is a matter of absolute confidentiality, as it could have major effects on your stock prices if the information gets out before implementation of the cut.

At a reception, you are approached by an elderly gentleman, who retired from the company several years ago. Virtually all of his savings and much of his retirement income is in company stock. He asks, point blank, whether he should sell some of his stock, in order to obtain some needed funds for living expenses. You know that he knows a "yes" answer will indicate some dramatic decision, such as a decision to cut the dividend, is impending. If you tell him "no," he could lose considerable value on his stock.

Questions:                                                                             

Do you tell him? What???

What do you say?

If you tell him, could it affect your company?

Could this affect your own job?

Give your suggestion and advise in your own words.

Answer 1

Solution:-

a) No, I will Not tell such information about dividend.

b) I will not tell anything as I am company official and such are the confidential information which is being decided by the management and we have to keep such information as confidential. Even if the person is an employee or an Investor such information will not be shared by me to the person.

c) If I tell him yes It would affect the company as such are the confidentail information and if such information is circulated in the market throgh that investor, he can misuse such information and can result in reducing the company fiancial market capitalisation.

d) If I circulate such information in the market it will surely affect my job as It will result in an incidence of insider trading wherein such confidentail information circulated in the market and being used by investor to gain.

e) Yes it could affect the job if such informaton result in majot part of market capitalisation fall down.