An Incident of Fraud in Xerox Corporation

523 Words Jan 26th, 2018 2 Pages
Xerox used ‘creative accounting’ methods to misrepresent its assets and liabilities, misleading investor’s and inflating its stock. The scandal was staggering in its scope and scale: chairman and CEO Allaire and others enriched themselves to the tune of millions at stockholders’ expense (Mills, 2003). The Xerox scandal reveals the necessity for accountability and ethics in corporate governance and finance: Xerox’s main problem was its incompetent, short-sighted and unethical senior executives.
By 1982, Xerox was fronting significantly reduced market shares as businesses such as Canon began out competing it in the same sectors as Xerox. However by 1997, Xerox’s corporation appeared to be improving. Beneath the management of chairman and CEO Paul Allaire since 1990, Xerox’s stock started to rise. On the other hand, the transformation was deceptive: Xerox was using creative accounting techniques to misinform the stakeholders about its real wealth. Allaire and others in Xerox’s top management were unloading their fraudulently-inflated stocks and pocketing millions, all while “’closing the gap’” between target and actual performance (Lowenstein, 2004).

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