Bonus Assignment #3 – Case Study Example
Bonus Assignment Investors in increasing their investment portfolio in a company must take into account the relevant legislation and ethical requirement. The case between Bally manufacturing and Trump is an epitome of how investors pursue their self interest for personal gain at the expense of other shareholders. In this case, Mr. Trump intention to increase his shareholding through a bid or purchase of shares is aimed at making him gain control and increase the rewards from the p0rospective increase in the company’s profit. I therefore believe that the active investment strategy of Mr. Trump does not add value to the company.
First, the management colluded with Trump by making premium payment on the former stock to help prevent the continuation of the legal suit that Trump protesting the lucrative payments that the management rewarded themselves. This action portrays Trump as a selfish investor who can be compromised through illegal action. Trump further accepted to receive$ 6 million as refund of expenses that could not be specifically accounted for. The scenario portrays a breach of the legal requirement on how companies should be stewarded and the SEC requirement. Excessive payment of management and exploitation of the minority of shareholding constitutes a breach of corporate governance requirement (Kim & Nofsinger, 2007).
Moreover, the agreement between the management and trump to halt the targeted acquisition of Golden Nugget casino illustrates collusion aimed at satisfying Trump interest without considering the plight of other stockholders. The intention of Trump to elect proxy members of the board also shows that the active investment strategy is not beneficial to the company.
Consequently, the numerous lawsuits and illegal transaction translated to declining values of shares hence leading to losses to other investors (Kim & Nofsinger, 2007). Other factors that contributed to the plummeting performance of the company include the resignation of the CEO and the bloated board of directors. The actions of Trump is therefore against the interest of the company and the shareholders hence the active investment program has no positive intent.
Kim, K. A., & Nofsinger, J. R. (2007). Corporate governance (2nd ed.). Upper Saddle River, N.J.: Pearson/Prentice Hall.