Ten Ways To Create Sharholders Value Alfred Rappaport

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Money as the single bottom line is increasingly a thing of past. Pursued profit leads to unethical management, propagate false or misleading information, bad corporation reputation, unstable employment, reducing long run profit etc.

Money as the single bottom line is increasingly a thing of past. Pursued profit leads to unethical management, propagate false or misleading information, bad corporation reputation, unstable employment, reducing long run profit etc.

More than a decade ago, one of the most commanding corporations in modern American history filed for bankruptcy. Enron, a seemingly invulnerable company would eventually provoke sweeping changes in regulation that controls the management and accounting of public companies even to this day. The Enron scandal has come to be known as one of the prime audit failures of all time and serves as a classic example of corporate greed and corruption. However, for the generation that watched in horror as corporations such as Enron fell along with the stock market, this scandal is slowly becoming just that: history. And for the newer generation of college students like me, it is almost ancient history. Despite the time that separates us from this scandal, it has never been more important to remember the lessons learned and best understand how the adoption of The Clarkson Principles can guide our careers in the business sector.

Additionally, this article is from a commercial publication, and though it is reliable and intended for an educated audience, it may include some dramatization and unnecessary information to make it more appealing for readers.

Next, the source and information within this article is current and relevant to the topic under study. This is the first and only publications of this article; this makes the ideas fresh and new. However, there are several other articles referenced on this topic which makes this a topic of interest among the professional, scientific community. The publisher of the Phi Delta Kappan is known for accepting articles that are reviewed and have met scholarly standards.

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The beginning of the twenty first century marked the dawn of a new age, but with its arrival brought a chilling reality that saw the credibility of corporate America being sorely tested due to the scandals that rocked the foundation of capitalism at its heart and soul. This disconnects saw executive management and the board of directors at odds with shareholders and stakeholders over how to attain wealth accumulation while still creating an atmosphere of good corporate governance. This paradigm led some to question that if managers, who are the principal agents of the corporation, act in the best interest of the company or for themselves. Lord Acton once stated, “Power corrupts, and absolute power corrupts absolutely”. There were three specific corporate scandals that led to failed confidence in the financial sector and the subsequent legislation known as Sarbanes-Oxley Act of 2002 which attempted to address this malfeasance: Enron, WorldCom, and Arthur Andersen.

In evaluating this article, the information presented was well documented and presented clearly. I found the information to

For instance, the Enron scandal in 2001 in United State. Enron was an extraordinary successful energy corporation and was named by Fortune as "America's Most Innovative Company" for six years. However, the company was bankruptcy due to their accounting fraud at the end of 2001. One of the trigger behinds this scandal is the profit-pushing culture among the company, all the mangers is motivated to compete instead cooperate. Enron, as an executive company, would have certain level of supervision on their accounting information system. Nevertheless, the directors and officers were still trying to uses the accounting loopholes to hide their monetary failures and mislead the numerical statement. The fatally flawed tone in Enron leads to a negative working environment. As a result, the Enron's accounting quality has dropped to the bottom. Another example is the Groupon, Inc, an American company that sells special deals to its customers, whose tone at the top is to putting up on good numbers without considering the actual result. In the end, the company was observed overstating revenue by using unaccepted practices. Thus, a poor tone at the top will result in a weak internal control and accounting reliability, which mislead the investors

The result of this ethical issue with Enron required the senior management a balanced effort in a way that it could minimize the loss and harm as a consequence from decisions that had been taken by previous management. According to this treatment, when management makes decisions, it has to consider interests of all involved parties who are affected by that changes and choose the actions which can maximize profit and all benefits along with it. They have to do the most good that they can. It is a big ethical dilemma—defending company’s own interest with a predicted damage to all the investors, or simply taking care of most of stakeholder’s benefits and leaving their own short term interest. According to the Utilitarian Theory, the answer is obvious. Immanuel Kant – the biggest philosopher in his theories came up with a standard saying “you cannot use others in a way that gives you a one-side benefit”.

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