Financial Management
Ethical behavior is the submission of moral principles cherished in modern societies in the businesses, particularly in regard to financial management. It ensures the owners and managers of companies behave accordingly to the ethical standards as per expectations of the society in which they conduct business.
Companies that practice healthy ethical behaviors tend to sustain an upper degree of stakeholder contentment, optimistically influencing the performance of the company. However, the lack of individual, skilled, and professional personnel ethics can result in negative financial performance. Financial managers should have the requisite skills to control large financial transactions. The witty to hold accountable executive audit committees and company directors is critical for a company’s financial management.
Examples of companies that have been guilty of ethics-based action related to financial management
Worldcom Scandal (2002)
- Company: Telecommunications Company; now MCI, Inc.
- What happened: Inflated assets by as much as $11 billion, leading to 30,000 lost jobs and $180 billion in losses for investors.
- How he did it: Underreported line costs by capitalizing rather than expensing and inflated revenues with fake accounting entries.
- How he got caught: WorldCom’s internal auditing department uncovered $3.8 billion of fraud.
Tyco Scandal (2002)
- Company: New Jersey-based blue-chip Swiss security systems.
- What happened: CEO and CFO stole $150 million and inflated company income by $500 million.
- How they did it: Siphoned money through unapproved loans and fraudulent stock sales. Money was smuggled out of the company disguised as executive bonuses or benefits.
- How they got caught: SEC and Manhattan D.A. investigations uncovered questionable accounting practices, including large loans made to Kozlowski that were then forgiven.
- REFERENCES
- Ferrell C., John F, Linda F, (2005) Business Ethics: Ethical Decision Making and Cases, 6 ed. Boston:
- Houghton Mifflin,
- REFERENCES
- Ferrell C., John F, Linda F, (2005) Business Ethics: Ethical Decision Making and Cases, 6 ed. Boston:
- Houghton Mifflin,
- REFERENCES
- Ferrell C., John F, Linda F, (2005) Business Ethics: Ethical Decision Making and Cases, 6 ed. Boston:
- Houghton Mifflin,
REFERENCES
Ferrell 0. C., John F, Linda F, (2017) Business Ethics: Ethical Decision Making and Cases, 6 ed. Boston:
Houghton Mifflin.
Ronald J. Ebert and Ricky W. G, (2018) Business Essentials, 4th ed., Prentice-Hall, Upper Saddle River.