CHAPTER 5
Ethical and Social Issues in M&As
INTRODUCTION
Mergers and acquisitions (M&As) have drawn considerable negative press over the past few decades. People like Michael Milken (Bruck, 1988; Stewart, 1991; Kornbluth, 1992; Stein, 1992) made more than $500 million in a single year during the 1980s by financing them with non-investment-grade (junk) bonds. Milken, along with Ivan Boesky (Boesky, 1985; Bruck, 1988; Stewart, 1991), Martin Siegel (Stewart, 1991), Dennis Levine (Frantz, 1987; Bruck, 1988; Stewart, 1991; Hoffer and Levine, 1992), and several other Wall Street moguls went to prison as a result of some of their activities. Others were arrested and had their careers ruined as a result, although no charges were ever filed (Crovitz, 1990; McGee and Block, 1990). Yet, supporters of Milken (Fischel, 1995; Gilder, 2000) are quick to point out that his activities caused capital to become more productive, leading to much of the economic growth that has taken place since the 1980s.
The purpose of this chapter is to examine ethical and social issues in M&As. The remainder of the chapter has the following organization. The next section provides a discussion of ethical ground rules and focuses on utilitarian ethics and rights-based ethics. The discussion then turns to ethical issues that can be applied to M&As. Such topics as poison pills, greenmail, golden parachutes, and ...
