Corporate And Accounting Ethical Scandals

In this case study we were asked to draw upon deontological ethics, and briefly discuss how Adelphia Communications’ executives violated the trust of the company’s shareholders and the trust of that of the larger public. Throughout this paper I will highlight two key ethical problems that were raised by the Adelphia Communications case. Utilizing Immanuel Kant’s Categorical Imperative, “deontological ethics” or so duty rights will be shared. Then I will apply the deontological framework of business ethics to the two key ethical problems that will be identified. Finally Kant’s Categorical Imperative will be applied to those two ethical problems as well.

As a publicly-traded corporation, Adelphia, Inc. was one of the largest providers of cable services in the United States. After the company went public, it was learned that the company had materially

In the past few years, enterprise integrity has come up on a regular subject of conversation. In the past ten years only, we have seen numerous situations associated with collaborative scams which have shaken the people 's trust in businesses and also the general economic climate. A few of the many salient frauds are the WorldCom and Enron 's scams, the ponzi scheme perpetrated by Bernard Madoff 's, the latest accusations of Goldman Sachs tricking option traders to guarantee the company 's personal profit. Incidents such as these designed us all, as upcoming corporation professionals as well as market leaders, think about ethics and its particular function in the commercial world (Gross, 2010.)

Are businesses in corporate America making it harder for the American public to trust them with all the recent scandals going on? Corruptions are everywhere and especially in businesses, but are these legal or are they ethical problems corporate America has? Bruce Frohnen, Leo Clarke, and Jeffrey L. Seglin believe it may just be a little bit of both. Frohnen and Clarke represent their belief that the scandals in corporate America are ethical problems. On the other hand, Jeffrey L. Seglin argues that the problems in American businesses are a combination of ethical and legal problems. The ideas of ethical problems in corporate America are illustrated differently in both Frohnen and Clarke’s essay and Seglin’s essay.

As with much of Enron, their outward appearance did not match what was really going on inside the company. Enron ended up cultivating their own demise for bankruptcy by how they ran their company. This corrupt corporate culture was a place whose employees threw ethical responsibility to the wind if it meant financial gain. At Enron, the employees were motivated by a very “cut-throat” culture. If an employee didn’t perform well enough, they would simply be replaced by someone who could. “The company’s culture had profound effects on the ethics of its employees” (Sims, pg.243). Like a parent to their children, when the executives of a company pursue unethical financial means, it sets a certain tone for their employees and even the market of the company. As mentioned before, Enron had a very “cut-throat” attitude in regards to their employees. This also became one Enron’s main ethical falling points. According to the class text, “employees were rated every six months, with those ranked in the bottom 20 percent forced to leave” (Ferrell, 2017, pg. 287). This system which pits employees against each other rather than having them work together will create a workplace of dishonesty and a recipe of disaster for the company. This coupled with the objective of financial growth, creates a very dim opportunity for any ethical culture. “The entire cultural framework of Enron not only allowed unethical behavior to flourish,

Barlaup, K., Hanne, I. D., & Stuart, I. (2009). Restoring trust in auditing: Ethical discernment and the Adelphia scandal. Managerial auditing journal, 24(2), 183-203. Retrieved from http://dx.doi.org/10.1108/02686900910924572

Ethical behavior is behavior that a person considers to be appropriate. A person’s moral principals are shaped from birth, and developed overtime throughout the person’s life. There are many factors that can influence what a person believes whats is right, or what is wrong. Some factors are a person’s family, religious beliefs, culture, and experiences. In business it is of great importance for an employee to understand how to act ethically to prevent a company from being sued, and receiving criticism from the public while bringing in profits for the company. (Mallor, Barnes, Bowers, & Langvardt, 2010) Business ethics is when ethical behavior is applied in an business environment, or by a business. There are many

The case study that was analyzed is, “Unauthorized Disclosure: Hewlett-Packard’s secret Surveillance of Directors and Journalists,” by Anne T. Lawrence, Randal D. Harris, and Sally Baack. The ethical issues presented through the case deal with Hewlett-Packard Company (HP). HP is a major international company in the computer and technology market. The company describes itself as a “technology solutions provider to consumers, business and institutions globally.” Their credo is called “HP way”, which focuses on points such as trust and respect for individuals, high level of achievement and contribution, business conduct with uncompromising integrity, objectives through teamwork, and encouragement of flexibility and innovation (Newman). The problems faced by HP’s board of directors were a lack of accountability with HP’s credo. If the “HP way” was followed by them, these ethical issues would be avoided. It also promotes a bad example by the high-level of management of this globally powerful organization.

The purpose of this paper is to discuss how Adelphia Communications’ leadership, particularly the Rigas family, violated the trust of the public and its investors through unethical and illegal business practices. First, a synopsis of the Adelphia scandal will be presented. Next, a brief overview of ethics and how they apply to maintaining good business and public trust will be discussed. Following the ethics overview, an outline of deontology and Kant’s Categorical Imperative will be covered. Finally, the business practices and ethical issues with the Adelphia scandal will be analyzed using the deontological framework and Kant’s Categorical Imperative.

Question 1 Summarize 1 one page how you would explain Enron’s ethical meltdown: Enron was an energy company founded by Kenneth Lay in 1985 through a merger of vast networks of natural gas lines. Enron specialized in wholesale, natural gas, and electricity, and made its money as a wholesaler between suppliers and customers rather than actually owning any. Enron in fact didn’t own any assets, which made their accounting procedures very unusual. The lack of accounting transparency at Enron allowed the company’s managers to make Enron’s financial performance better than it actually was. The organizational culture at Enron was to blame for it’s ethical meltdown. Enron’s accounting scheme slowly began to erode its ethical practices, which soon led the culture of Enron to become a more aggressive and misleading business practice. Enron reported profits from joint partnerships that were not yet attained in order to keep stock prices up (or make wall street happy). As this was happening employees began to notice the ethics in senior management (leadership) deteriorating, and soon after they to would follow in their footsteps. Senior management thought they were saving their company from financial ruin and though lying was ok if it meant saving the company. Investors would surely sell their stocks if they really knew the situation the

In light of the recent scandals that rose around big multinationals such as Enron and WorldCom, it has become evident that reform in the traditional corporate operations and objectives was to be encompassed in the organisations corporate strategies. Indeed throughout the years, companies main objectives were defined primarily as being economic objectives, Multinationals developed with sight of profit maximisations regardless to the other incentives, Friedman considered that to be the foundation for a well-managed company, it was further considered that the financing of any other sort of social corporate activities rather unnecessary. The expenses were regarded as expenditures for the owners and investors; this was a time where shareholders rights were regarded as conflicting with other constituents namely the employees, creditors, customers or the community in general. However this interpretation is seen as rather inadequate due to the nature of the amalgamated relation between both constituents. Stakeholders in modern corporate doctrine are considered as a core apparatus for the well functioning of a business. It is however often argued that the only way for a corporation to achieve better results and maximise its profits is to include other people in the process, individuals or organisations with direct or indirect interest in the well performance of the company, that is the reason why modern regulations and codes include a number of stakeholders other than the

In the first ethical problem selected, two separate books were kept by personnel in the Adelphia financial management department with the intent of deceiving external auditors; thus leading shareholders and the public to believe that the company was ultimately worth more than it was in actuality. In the second, the Rigas family frivolously dwindled away public money for personal selfish consumption which is clearly a violation of the public’s trust. In the weeks following the unraveling of events and divulgence of information, a number of townspeople and investors were concerned that the family was rather free with shareholder money and further believed corporate money was used to finance public generosity as previously discussed in this paper (Barlaup, Hanne, & Stuart, 2009, p. 10).

Ethics is something that is very important to have especially in the business world. Ethics is the unwritten laws or rules defined by human nature; ethics is something people encounter as a child learning the differences between right and wrong. In 2001, Enron was the fifth largest company on the Fortune 500. Enron was also the market leader in energy production, distribution, and trading. However, Enron's unethical accounting practices have left the company in joint chapter 11 bankruptcy. This bankruptcy has caused many problems among many individuals. Enron's employees and retirees are suffering because of the bankruptcy. Wall Street and investors have taken a major downturn do to the company's unethical practices. Enron's competitors

The case that I am focusing on is the accounting scandal by WorldCom in 2002. WorldCom was a telecom company that purchased many other firms and eventually bought MCI, currently owned by Verizon. In the years it was still operating as WorldCom, it had already taken over most of the Internet and data communications market, being known as the second largest long distance telecom company before it went bankrupt. With all this happening, the company would have to face two challenges if they were to be successful: one is the management of old and new organizations into one and the other challenge is the financial aspects of the new organizations (Moberg, 2003). During the company’s highest peak of success, it was considered one of Wall Street’s focuses. Through improper accounting practices, the company was able to favour themselves with new acquisitions as it allowed them to tinker within its financial aspects. The company decided to reduce reserve accounts from liabilities in order to add it to their revenue lines and got members to change operating expenses into long-term investments which in the end resulted in profits instead of losses. However, when WorldCom stocks started to decline the CEO at the time of this scandal, Bernie Ebbers, sought to pursue revenue growth and with an autocratic corporate culture persisting within the company, practices such as this were able to happen. An autocratic corporate culture would incorporate aspects such as centralized power in a

Ethical Lessons Learned from Corporate Scandals Ethics is about behavior and in the face of dilemma; it is about doing the right thing. Ideally, managerial leaders and their people will act ethically as a result of their internalized virtuous core values. The Enron scandal is the most significant corporate collapse in the United States and it demonstrates the need for significant reforms in accounting and corporate governance in the United States. It is also a call for a close look at the ethical quality of the culture of business generally and of business corporations (Lessons from the Enron Scandal).