NewsWire--APRIL 30, 1996
TOPIC: Business Ethics,
Common Stock Valuation
SOURCE: "Exposure
to Workplace Tobacco Smoke is Greater than Believed, Study Says,"
Timothy Noah, Wall Street Journal, April 24, 1996, B11;
"AMA Wants Tobacco-Free Mutual Funds," Karen DaMato,
Wall Street Journal, April 24, 1996, C1.
SYNOPSIS: Prompted by
the release of a recent study showing the health dangers of second-hand
smoke, American Medical Association officials urged investors
to avoid 13 stocks and 1,474 mutual funds that invest in tobacco
manufacturing. The AMA will publish an annual list of offending
funds and praise funds that sign a no-tobacco pledge and join
the "AMA Coalition of Tobacco-Free Investments." The
articles offer an opportunity to discuss the goals of the corporation,
or fund manager, and the impact on shareholder value of boycotting
a company's stock. This is a very controversial and open-ended
issue. The discussion comments herein are meant as a guide for
getting a discussion going, and are not meant to suggest the author's
opinions to students.
DISCUSSION QUESTIONS:
1. Are tobacco companies acting in an unethical
manner by selling tobacco products?
2. Are investors who hold tobacco company stock
acting in an unethical manner?
3. How will the AMA proposal impact the value
of the tobacco companies?
4. What other methods could the AMA use to impact
the tobacco companies?
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