The Conundrum of Valuation
When the value of a company increases through accounting fraud, it will certainly benefit the selling shareholders since they are being overpaid for their stakes, but the management will be cheating the buying as well as existing shareholders.
When the value of a company increases due to profit or an increased prospect of future profit, the appreciation is good for the shareholders selling the stake as well as for those buying new ones.
However, when the value of the company increases due to hype, demand, optimistic misconceptions, or such market factors, it is certainly good for the selling shareholders because they are being over paid, but bad for the buying shareholders because they are overpaying the stock. The question is, in such an appreciation, should a management openly state of the improper appreciation so as to prevent the over payments?
The existing shareholders can argue that the responsibility and allegiance of the management must be to facilitate the highest legally allowed returns to them. And that, since the appreciation is caused by market factors, the management doesn't have any ethical concern. This is true too.
But since the buying shareholders become your existing shareholders, would it be alright to consider warning them of the inflated prices as part of the same responsibility? If, technically speaking, this responsibility comes into effect only after an investor has purchased the shares, would it not be at least a professional courtesy to warn them given the fact that they become part of the business?
Dharma is hard in some cases.