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Exxon: Ethical responsibility and shareholder value

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Documents uncovered after the Exxon Valdez oil spill in Alaska revealed that Exxon could have used double-hulled oil tankers that would have prevented the spill, but the cost of refitting their fleet of single-hulled tankers was considered too high. Exxon determined that the cost of cleaning up an oil spill would be less than the cost of refitting the ships, thus increasing shareholder value. Several years after the oil spill, however, Exxon was fined billions of dollars for the spill. How do the costs of the clean up and the fines pertain to a discussion of maximizing shareholder value and ethical responsibility?

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Solution Summary

This solution discusses Exxon's oil spill incident and its impact on shareholder value and the company's corporate social responsibility.

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First of all, it was the ethical responsibility of Exxon to prevent this accident by using double-hulled oil tankers because such action would have prevented the negative impact on the environment. Exxon should have given more importance to its corporate social responsibility and should have acted in a responsible and ethical manner by making desired investments in the new oil tankers. The company ...

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Sheetal Jain, PGDM
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  • BComm, University of Delhi
  • Post Graduate Diploma in Management (Equivalent to MBA), All India Management Association
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