National Occupational Competency Testing Institute (NOCTI) Business Practice Exam

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What type of behavior did the CEO exhibit when urging employees to buy stock and selling their own stock before a price drop?

Ethical behavior
Unethical behavior
Transparent behavior
Informed decision-making

The correct answer is: Unethical behavior

The CEO's behavior is indicative of unethical behavior because it involves a conflict of interest and a breach of trust. When a leader encourages employees to invest in company stock while simultaneously selling their own shares before a price drop, it suggests an intention to manipulate the market for personal gain. This action exploits the employees' trust in the CEO's judgment and positions them at a disadvantage, as the employees may not have all the information that the CEO possesses. Ethical behavior in business requires transparency and fairness, where leaders should not benefit personally at the expense of their employees or the company's integrity. Overall, such actions undermine the ethical standards expected in corporate governance.