Ethical behavior is fundamental to communications between investors and companies. However, it is difficult for company founders to control their enthusiasm in discussions related to their company, such that sometimes new companies overstate their potential for future success, either intentionally or unintentionally, in order to generate investor interest. For example, Nikola Corporation, a pioneer in electric semi-trucks, was investigated by U.S. securities regulators because critics claimed that the company's chairperson made false claims about the company's progress in his efforts to make Nikola "the Tesla of semi-trucks." Shortly after its stock began trading publicly, the company was estimated to be worth $30 billion, even though it had yet to pro- duce its first electric truck. Similarly, Tesla's founder and CEO, Elon Musk, has been investigated by the Securities and Exchange Commission a number of times regarding the accuracy of his communications, including Tweets. Instructions In groups, discuss the following topics.

Instructions

a. Should companies be held accountable for the fairness of their communications, or instead should it be the responsibility of investors to determine whether company statements are true and fair?

b. Suppose that you founded a new company. What steps would you take to ensure that your communications were accurate, while still generating enthusiasm with investors?

c. Search the Internet to find information about the allegations and any results of regulatory investigations regarding the accuracy of Elon Musk's communications about Tesla. Provide a brief summary of your findings.

d. What are the potential costs to society of inaccurate company communications to investors?