Reference no: EM13835051

PART 1

Lockwell has recently developed the XK-9000 motor engine which will cut carbon dioxide emissions by over 50 percent of anything currently on the market and for the foreseeable future. However, research has shown that the level of these emissions is not of great concern to the majority of customers who purchase motor vehicles. Further, the expense of the XK-9000 is such that it would cut Lockwell's profits by at least 30 percent over the next 3 years at a minimum if they were to place it in all their vehicles.

Based on the foregoing, do you think Lockwell should install the XK-9000? Please state whether your response reflects the stakeholder or shareholder view of corporate governance.

PART 2

Lewis Archer is an outside auditor who discovered various irregularities in his recent review of Busey Energy Futures. Among other things, on review of Busey's 401(k) investment fund, he discovered that approximately 70 percent of the funds were invested in stocks of companies that were actually set-up and owned by the members of the Busey board of directors. Further review indicates that these companies were set-up for the express purpose of hiding Busey's own debt. Simply put, he has discovered another potential Enron situation. However, before reporting his findings to the proper authorities he calls his brother who owns an investment firm, and for whom he does some consulting work on the side. He instructs his brother to sell any stock his clients have in Busey and the shell companies. Lewis then waits a day before reporting the findings to the proper authorities.
Are Lewis's actions ethical in this case? Why or why not?