The moral hazard of too big to fail institutions also applies to creditors. If a creditor feels that a firm is too big to fail, they will demand less compensation for their risk. The financial markets in general can become less disciplined, further causing destabilization. This, combined with the moral risk within these large firms, can create a spiral effect of irresponsible financial decisions. Executive
Narcissists might become leaders after they help to remove the company’s uncertainty, but their qualities would totally become useless once the uncertainty is gone. Moreover, their interest of taking high risk would hurt the company in the long term. Risking is like a gamble that could be win or lose. Therefore, if the narcissists lose the gamble, the company would in a big trouble, and even bankrupt. In the article “Narcissistic Leaders”, Michael Maccoby wrote an example about narcissistic leader.
Another major risk that Macy’s encounter is the impact of company’s revenue and operating results that are depending on economic, political condition, and other developments. Assuming that federal open market committee decided to stabilized economic growth because of the unfavorable economic by controlling money supply, which can affect customers spending. The company cannot control government decision over developing economic
Thus, giving the competitor a way to overtake them. o Shareholders were affected by the case as the prices of the shares would have fall affecting the shareholder’s Return on investment. Due to fall in share price, the investor would get hesitated while buying the shares of the company in the future. o Employees of the company would lack trust among themselves as well as will lose sense of community. o Community was misloaded by the company to treat the pain specified on the packaging relevant to that product.
Egoism impacts Verizon’s ethical business decision making because there could be those decision makers that make their decision based solely on how it will benefit themselves. This could be a severe problem for a company because someone’s greed could affect all the stakeholders of Verizon. Unfortunately, there are may self-centered individuals who only care about themselves and how much they can benefit from a decision, regardless of how it will affect others. Some examples of this could be someone who takes part in insider trading and someone who take part in collusion where they solely receive financial
A) Introduction Unethical behaviors in business affect everyone since you either work in the field or are a consumer of its services. Unfortunately, almost every company usually has individuals who act unethically whether it is for their personal benefit or for the sake of the company they work for. Unethical behaviors in business might be as simple as using company property or funds for personal gain to inside trading and financial fraud. According to The Chartered Institute of Management Accountants, nearly one third of business professionals feel pressured to compromise their ethical standards and are increasingly pushed towards unethical behavior. Moreover, “misconduct is common and accepted by business services professionals, the integrity of entire economic systems is at risk”, states Jordan A. Thomas, partner and chair of the Whistleblower Representation Practice at Labaton Sucharow law firm.
Conflicts of Interest The financial principle “Conflicts of Interest” is a situation arising as a result of incompatibility of the desire of multiple parties; moreover it can be viewed from another angle of perspective as a position in which one derives individual benefits from the preceding acts agreed upon in the official capability. Agency problem being conflict of interest incorporated in any association whereby one partner is to act at the benefit or interest of another, which exists between stakeholder’s company and its management, even though it is to the mangers best of interest ,they intend on maximizing the wealth of the stakeholders by making proper decisions. One of the aims of many organizational conflicts are as a result of pressure between one’s motivation to act in on the basis of their own self gain and effort to authoritative rules of the institution to bring back the social esteem back such as morality and justice. The interaction between ethical motivation and self-interest is
There are cases in which the investor (shareholder, customer, etc.) selects a consultant who has not the ability to understand his needs and he is not deliver his requirements, this could be happen because of the investor has lack of information or disinformation, hence, insiders have private information about exogenous variables which is not well known to all interrelated business partners, this asymmetric information category is known as adverse selection. There are also cases in which company's insiders deliberately mislead their clients-investors for their own interest. In that case the interests of both sides are conflicted and eventually the one with better information wins, this case is called moral hazard. (Baker W. 2010) These two aforementioned concepts of the moral hazard and adverse selection, cause the asymmetric information and agency gap.
Leadership is the ability to influence a group towards the achievement of a vision or set of goals. The source of this influence may be formal, such as that provided by managerial rank in the organizations. (Robbins and Judge, 2009). Various researchers studied the company and reasons behind this downfall. While dubious accounting practices are said to be the reason for the failure, these practices were driven by the top leaders and hence bad leadership can be considered to be the reason for the organization’s failure.