Ethics Essay

2054 Words Oct 15th, 2014 9 Pages
Our case study discusses the rise and fall of one of the largest telecommunications corporations in the world, Nortel Networks Corporation. Nortel was one of the many early 21st century telecommunications companies that failed due to upper echelon management, a dysfunctional board of directors, inflated costs and earnings, and a smoke and mirrors illusion of stability. There were many avenues that could have been taken that would have prevented the demise and fall of the organization, but those roads were not traveled. Many argue that government intervention could have prevented the backlash and whitewater effect of Nortel’s bankruptcy, but due to corporate ties within the government and the Securities and Exchange Commission the many …show more content…
Although initially they created unintended unethical behavior which probably resulted from a dysfunctional management team, those initial ideas would later lead to several action sequences that would have lasting effects. The two moral imperatives of “do not lie” and “do unto others as you want done to you” were not attributes that several of the board members held (Collins, 2011, pg. 24). There are a multitude of mechanisms that should be put in place to better align managers with the interests of shareholders, and the government plays a big part of that puzzle. Agency problems arise when the management of a public company pursues its own economic self-interest ahead of shareowners’ and secondary stakeholder’s interests’ and portrays disregard for the respect for others and does not reflect at atmosphere of corporate citizenship. This behavior may manifest itself in the form of golden parachutes, long-term employment contracts, corporate jets, and other perquisites. Managers are susceptible to human nature and may pursue their own economic agendas without any concern for maximizing the wealth of the shareowners (Anson, White, McGrew, Butler, 2004). Nortel investors complained that even in its downward spiral, the executives received bonuses and issued excessively optimistic projections. Soon there would not be much left other than the lawsuits alleging issuance of misleading financial statements and blatant insider trading

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