Stock exchange entails an exchange in which the stock traders and brokers buy and sell securities. As described in a video by Kurzgesagt studio, securities are essentially the rights to assets. Bonds and shares/stocks are some of the examples of securities traded in the stock exchange markets. A stockholder or shareholder is a person or an institution that owns bonds, shares/stocks, or other securities in a company, thus, owning such a company. As the partial owners of a company, the stockholders are entitled to certain rights. The present paper describes these rights and what an ethical lapse entails.
One of the stockholder rights is the right to vote. In particular, they have the right to vote on the issues, which affect the company. Besides, the stockholders have the right to acquire new stocks that the company issues. This right is also known as pre-emptive right. The companies are required to offer their current stockholders the new shares/bonds before selling them to the non-shareholders. The other right that the stockholders have is the inspection right. In particular, it is the right of the stockholders to inspect the company’s books and records. They also have the right to information. The directors are required to provide the stockholders with periodic reports that have updated information about the company. The stockholders also have the right to sue the company for the wrongful acts committed by its officers and directors
An ethical lapse can be described as a fault in judgement, which results in a harmful result. Consequently, an ethical lapse has an adverse impact on the company. It damages the future of the corporation. Specifically, an ethical lapse makes the stockholders lack trust in the company and invest in its business rivals. As a result, this affects the performance of the company and contributes to its downfall. The stockholder rights such as the right to information and the right to file a lawsuit against the company arise when a particular ethical lapse by the company’s directors produce adverse outcomes such as losses, which harm the stockholders.
Works Cited
Kurzgesagt Studio. "How The Stock Exchange Works (For Dummies)." YouTube. N.p., 28 Nov. 2013. Web. 5 Apr. 2016.
