Choose one of the following companies (or any company that has been in the press
ID: 389638 • Letter: C
Question
Choose one of the following companies (or any company that has been in the press) and write a 2-3 page, APA style critical analysis of the ethical issues involved in the case. Legal Cases: Tyco Imclone Global Crossing WorldCom Adelphia NYSE and Richard Grasso Merrill Lynch Health South Marsh and McLennan Al Dunlap and Sunbeam The analysis should include the following: A short description of case Identification of the ethical issues involved (what was the alleged ethical wrong done, and why is/was it wrong?) A statement, in their own opinion, of whether it was wrong or not, and more importantly, why? Thoughts on what could have been done to avoid the problem – do we need more laws & government regulation? What internal controls might have prevented this situation? Was the problem more a matter of individuals gone wrong, or was it more systemic and organizational? Provide 3-5 APA style references both inline and at the end of the paper to support your analysis. Please write in 3rd person
Explanation / Answer
Case Review and Analysis: AI Dunlap and Sunbeam
Ethical issues involved in the case:
Subsequent to the appointment of Dunlap as CEO of Sunbeam, although the company recouped from the losses, but it was a financial analyst, Andrew Shore who identified some of the glaring issues pertaining to the financial statement of the company.
Due to the Bill and hold strategy, adopted by the Dunlap, stock prices of Sunbeam Corporation were artificially inflated, which enabled the company the garner the revenues in the current quarter itself, against the forecasted sales and revenues for the company.
Opinions involved concerning the case:
Considering the above scenario, though Bill and hold strategy adopted by CEO Dunlap didn’t seem to be an illegal move but at the same time it also stirred the hornet’s nest of slurry of allegations leveled by its shareholders, who alleged that company had artificially created a vibe of good market sentiments and trapped the potential shareholders to buy those stocks.This act of company and CEO forced the shareholders to file a lawsuit against both of them.
Though it was not an illegal issue as per the generally accepted accounting principles (GAAP), but at the same time, it was an ethically wrong move that deceived the shareholder while giving them a false sense of positive market buoyancy amongst the shareholders, which certainly should have been avoided.
Things which could have been avoided-
Before taking such a bold decision, shareholders should have been informed upfront and they should have been taken into the confidence because any company is not run by an individual but the group of board members and shareholders, who fund the company for its business. If shareholders would have permitted this move, then company and CEO could have gone happily with the artificial inflated price approach.
Problem with an individual or organization
Prima facie, here CEO Mr. Dunlap can be held accountable for this goof up. He was the face of the company and he could have behaved more sensibly.