Managing a crisis is the ultimate test of ethical practices in leadership to be precise. As usual, financial crisis has a way of marking the collapse of ethical behavior. Lou's actions are unethical by all means; he acted irrationally, in fear by using undisclosed information, from a reliable source for selfish interests at the expense of the company’s reputation. His focus was to secure his shares; he was not concerned of how his actions would potentially damage others not excluding rendering the corporate bankrupt.
Potential consequences of Lou’s actions include fluctuating stock prices which lead to market instability, financial instability of the corporation, customer/investors decrease, and protests may occur and concrete partnerships with other firms are lost. Stock market changes not only affect the corporation but also cause widespread economy disruptions. Ownership structure in the corporation, whether long-term or short term affects the stock prices. When stock prices fall, investors with short trading horizons are forced to sell larger extent than those with larger shares. Panic selling like in the case of Lou Hoskins, creates supply and demand effects that drive prices below normal fundamental values.
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Lou’s actions affect investors who were interested in the Gold mine Corporation. Public-private partnerships would also be affected due to the decrease in stock after financial statements are released. The real effect of financial market is not only felt by investors but also by other players in the corporation such as lenders, customers who will not want to be associated with the corporation due to its reputation, directors, regulators and even employees who would have delayed salaries. Stock market changes affect ordinary citizens by affecting pension funds and business investments. With a huge amount of shares being withdrawn by Lou, bankruptcy of the Gold mine would be unavoidable.
