Yahoo! Summative Assessment Family Name, Case Study

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(Thomas a. Piraino, 2009)

The particular case of Yahoo! rejecting Microsoft's claim did not constitute a real violation of any existing laws, though it does touch on some issues of ethics regarding company paid stockholders selling stocks during merger talks (which verges on insider trading) as well as ethical issues surrounding stockholder interests and deliberate actions that might devalue the company to make it less desirable to another. (Summative Assessment Case, 2009-2010) Insider trading is a significant problem in big business that is rarely addressed, despite the Enron and other big name scandals. (Anand & Beny, 2007) (Aier, 2008) (Darrough & Ye, 2006)

The fact that Yang did not rightfully perform his fiduciary duties to shareholders in the negotiations with Microsoft is apparent by the inside attempt to take hold of the company by Carl Icahn and his team of proposed board members, and possible disgruntled shareholders. There is no doubt that Yahoo! failed its shareholders by asking to much for the stock trade and possibly overtly devaluing the company with its proposed acquisitions and collaborations. Though there are not many regulations that state that a company must take a buyout offer if it benefits shareholders the loss of faith is pronounced in this case and shows significant disregard for shareholders. Icahn also brings up important points when he demands that the company redress the offer with a shareholder vote on the matter, as well as on leadership. (Summative Assessment Case, 2009-2010) (Dalley, 2008)

Many argue for the development of a sort of universal bill of rights that would conform business to certain ethical principles and further protect shareholders and consumers from big business walking all over them. This is in response to globalization as well as the fundamental scandals that have resulted in other legal and tax regulations. (Thomas a. Piraino, 2009) the (Dalley, 2008) (Sell, 1995) in the current business climate most companies both prefer and are given the right to self-regulate on most financial decisions, despite concerns by shareholders or others.

The increase in private equity investments has facilitated a corresponding concern with the ramifications of ownership because these firms are largely unregulated. Media regulations, particularly in the United States, only place limits on companies that exhibit management control over the day-to-day operations of a media property. (Arsenault & Castells, 2008, p. 739)

Some universal corporate social responsibility, beyond that which is created as response to controversies and scandal is likely something that will be seen in the not so far future, but as of today there is no such system. (Hoffman & McNulty, Winter 2009)

What governance or other regulations and standards, currently applicable elsewhere or not yet applicable anywhere, would you recommend?

Task 5

The ethical standards that allow blame to be waged against Yang and those who were involved in the negotiations of the Microsoft deal are those which have been noted above, the rejection of a deal that would provide value for shareholders, beyond what they would likely see in the current recession and the loss of the development of a merger that may have created real competition in the market for Google. The potential for insider trading is secondary, and was performed by other culprits of the situation. (Summative Assessment Case, 2009-2010) Though some claim that the proxy takeover fronted by Carl Icahn, was also suspect and should allow Icahn to be labeled a culprit as well, yet despite his maneuvering once the deal had been rescinded by Microsoft it was clear that someone needed to speak for the shareholder in this case. (Hyslop, 2010) (Varallo, David, & Peter, 2009) Though it is fair to show sympathy to Yang, as a co-founder of a fiercely independent and largely successful company, that grew from a simple idea to the multi-billion dollar company in a matter of just 13 years, as he was not likely ready to hand over his company, no matter the realistic terms in the face of Microsoft's offer.

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Ethically mergers and potential takeovers are a challenge to the fiercely independent American mindset, yet at the same time in the wake of several big name scandals involving big business and the disregard for shareholder interest it is also easy to dismiss such sympathy.

The expected virtue of corporate decision makers is for most seen as one that qualifies them as rarely able to make decisions that go against their own personal gain. Though Yang and others did not use the bottom line to make the decision to reject Microsoft's bid the other way to look at it is to see that those at the top often feel wholly protected by financial downturn, as they without a doubt will likely still receive considerable safety nets in the form of severance and other bonus packages upon resignation or even with continued tenure in the face of economic downturns. CEOs and other high level execs live in a very sheltered and protected world that does not often get threatened, even by criminal prosecution, where laws can be proven to have been broken. (Anand & Beny, 2007) (Aier, 2008) (Hoffman & McNulty, Winter 2009) it is clear from many other examples that public pressure does elicit some results with regard ot ethical business practice, when the potential for real consumer harm is publicized. Yet, the development of company corporate social responsibility statements, and some nominal alignment with them rarely really makes a real change in the manner in which business is conducted. When the limelight is transferred to another scandal or issue corporate decision-makers can be seen to return to business as usual. Though self-regulation is the preferred U.S. method of control real regulations grow on an almost daily basis, challenged by the global economy and growing social awareness of damaging business practices.

Resources

Aier, J.K. (2008). Insider Trading in Loss Firms. University of Arizona, 1-51.

Anand, a.I., & Beny, L.N. (2007, November). Private Regulation of Insider Trading in the Shadow of Lax Public Enforcement (and aStrong Neighbor): Evidence from Canadian Firms. University of Michigan Law School, 4-74.

Arsenault, a.H., & Castells, M. (2008). The Structure and Dynamics of Global Multi-Media Business Networks. International Journal of Communication, 707-748.

Beyazitoglu, F. (2009). Business Marketing - the Case of Microsoft. Germany: GRIN.

Curwen, P. (2008). Microsoft Googles Yahoo. Emerald Group Publishing Limited, 10 (4), http://www.emeraldinsight.com/journals.htm?articleid=1732693&show=html.

Dalley, P.J. (2008). Shareholder (and Director) Fiduciary Duties and Shareholder Activism. Housten Business and Tax Journal, 302-335.

Darrough, M., & Ye, J. (2006). Valuation of loss firms in a knowledge-based economy. Review of Accounting Studies, 12 (1), 61-94.

Hansell, S. (2008, February 25). Yang: Microsoft Bid Was a "Galvanizing Event" for Yahoo. The New York Times, pp. http://bits.blogs.nytimes.com/2008/02/25/yang-microsoft-bid-was-a-galvanizing-event-for-yahoo/.

Hoffman, W.M., & McNulty, R.E. (Winter 2009). International Business, Human Rights, and Moral Complicity: A Call for a Declaration on the Universal Rights and Duties of Business. Business and Society Review, 114 (4), 541-570.

Hyslop, E.I. (2010). Limits to Horizontal Strategies: Majority Shareholders Facing Minority Activism . Legal Strategies, 389-402.

Matzick, L., Kusters, K., Krall, T., Kuhn, T., & Schumacher, G. (2008). "Yahoo!" - a case study about brand valuation. Germany: GRIN.

Microsoft Corp. (2008). Microsoft Withdraws Proposal to Acquire Yahoo! Press Release, Redmond, WA.

Roberts, C.E. (2008-2009). Can I Still Google My Yahoo - Reframing the Net Neutrality Debate - Why Legislation Actually Means Deregulation. Heinonline, http://heinonline.org/HOL/LandingPage?collection=journals&handle=hein.journals/umkc77&div=30&id=&page=.

Rosenzweig, P. (2007). The Halo Effect...and Eight Other Business Delusions that Decieve Mangers. New York, NY: Free Press.

Sell, S.K. (1995). Intellectual property protection and antitrust in the developing world: crisis, coercion, and choice. International Organization, 315-349.

Stockport, G.J. (2010). Google: organising the worlds' information. International Journal of Technology Marketing, 5 (1), 27-43.

Summative Assessment Case. (2009-2010, Semester 3). "Did we want to do the deal? Yes!."

Thomas a. Piraino, J. (2009). An Antitrust Common Law for the Twenty First Century. Utah Law Review, 636-682.

Varallo, G.V., D.S., & P.C. (2009). Stormy Weather Time to Prepare. Journal of Securities Law,….....

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