The professional term for this type of fraud is called round-trip trading. “Round-trip trading artificially inflates volume [of sales] and revenues, but in reality adds no profit” (Bostan & Grosu, 2010). When Wall Street Analyst Richard Grubman asked Enron’s CEO for the company’s balance sheet along with its earnings statements, Enron stated that they could not release them (Core, 2010, p. 273-287). As stated earlier, because of Enron’s unethical accounting practices, the company filed for bankruptcy, but it also had a tremendous effect on many other people. Investors lost millions of dollars, along with the price of Enron’s share, which dropped for $90 US to just pennies.
However, if you consider the perspective of its higher priced (one might say overpriced) competitors, one could argue that FinerBags.com is an abomination that should be driven out of business. Certainly laws in most industrialized countries would support this IF FinerBags.com was being disingenuous in their presentation of their product and if there were no visible dissimilarities between their product and the authentic pieces they replicate. On this last statement hinges the argument determining if the business of FinerBags.com is right or wrong, or can be universally disqualified as being righteous. Arguing from the perspective of Louis Vuitton, Coach or the numerous other designers threatened by FinerBags.com’s business, one could state that they are infringing on the quality and status that the designer manufacturers have developed over years of service to the fashion industry. This argument; however, implies that competition in the marketplace should only be between the established players.
Business ethics could define as the practices of corporation and firms regarding their responsibility and their way to behave as the same as the principles that can applied to individuals’ behavior towards society. The topic sparks flame of conflict between economists Milton Friedman who stands against the topic while on the other side Colin Grant responds to the arguments of Friedman and supports the necessity of ethic in corporations. Friedman’s point of view of business could described as machinery of making money without considering society, but Colin’s point of view is that business is not isolated from society and it is a part of it. Both of the articles show three major points of discussion social responsibility, political interferes and the free-market. Friedman criticizes some of the executives’ speeches about business responsibility, which reflects a wrong image about business and corporations.
In this competition, the rules are different from what they are in ordinary social dealings. Anyone who abides by ordinary moral standards instead of the rules of business is placed at a disadvantage. Therefore, it is not unethical or immoral to abide by the current rules of business. (These rules are determined by what is generally done in business and in part by legal statutes governing business activities.) By this thought, Norman Chase Gillespie (133) decried the normative and relativistic understanding of ethics in business in the contemporary times; uninfluenced by morality.
The misconduct of code of ethics by the management level by Enron corporation has led to the another question – The ultimate responsibility of a corporation towards society ? The ultimate responsibility of a corporation is to gain profit or become a stable economic unit ? (Johnson , 2014 ) In this case , it shows that under normal circumstances the management level of a company or corporation will choose to hide the truth over honesty and integrity .In other way , profitability has override the important of ethics in the corporation .
Barclays couldn’t gain much of a profit because the country was suffering from financial crisis which left several companies being shut down. The manipulation of Libor rate left several industries under huge debts during the crisis and the financial crisis worsen up because of the debt individuals were in. Barclays didn’t gain but it lost a lot after the Libor scandal was revealed as the bank was being fined for its involvement in the manipulation of Libor rates. Barclays reputation as the largest bank was tarnished after the scandals were revealed. Barclays lost more money than they could have made by the fines they are currently paying for their role in the manipulation of the Libor rate.
“It is unfortunate that Ronnie Chan got tied up in the Enron situation, it is quite unfair to blame independent directors who have to depend on the external and internal auditors who are suppose to be giving independent and capable reports.” (Mark Mobius) The above quote lays the responsibility of the fall of a company on the auditors. The biggest audit fail of Enron Corporation not only led the company towards declaring bankruptcy but also dissolved one of the five big professional services companies, the Arthur Anderson. However, it may not be fair to blame the auditing profession entirely for the fall of a company. In the case of Enron, the chief financial officer himself concealed
Wells Fargo executives were notable mainly in their inertia although there existed years of evidence that a policy coming from the top level was driving abusive/illegal practices & irregularities at the Bank. In 2013, when the Los Angeles Times reported that fake accounts were opened by the employees to fulfill unrealistic sales objectives; and in 2016 (September), when the Bank admitted that its employees has created more than 2 million phony accounts and then agreed to pay a fine of $185 million, none of the senior executives went into an action. They decided to take back some of CEO Stumpf’s compensation only after he was reprehended in congressional hearings. Still, they never fired him - he resigned on his own.3 Wells Fargo board acted as if it were asleep in the early fall and had been too trusting of management. Corporate boards are failing at their job of overseeing management.
Introduction Insider trading is a term that is teeming with negative connotations and surrounded by controversy. I mean, who can forget the scandal of Martha Stewart the homemaking hoaxer? Insider trading can be legal or illegal depending on the circumstances. However, my focus is not to discuss the legalities of insider trading. My aim in this essay is to define the concept of insider trading, discuss how it is regulated, describe the notion of business ethics, discuss how these principles apply to the concept of insider trading, outline ethical arguments surrounding insider trading and ultimately prove that the offence of insider trading is highly unethical.
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (G.A.A.P) GAAP is an international convention of good accounting practices. It is based on the following core principles. In certain instances particular types of accountants that deviate from these principles can be held liable. The Business Entity Concept:- The business entity concept provides that the accounting for a business or organization be kept separate from the personal affairs of its owner, or from any other business or organization. This means that the owner of a business should not place any personal assets on the business balance sheet.