Friendly performed well when managed by the founder, Blake brothers. But it is regrettable that the performance began to become worse when the company is sold to the Hershey under its management. Then the Friendly was soled to the Smith through leveraged buyout in 1988, with his bad management the company was aggravate worst with the high debt of $260 million in 2000. Smith holds 70% of TRC and 10% of Friendly, he misusing the company 's fund, then he had publicly badgered the board of directors to turn things around. Smith as the CEO is overconfident and situation ambiguity.
Conflicting Interest: It has been suggested that conflicts of interest and a lack of independent oversight of management by Enron's board contributed to the firm's collapse. Moreover, some have suggested that Enron's compensation policies engendered a myopic focus on earnings growth and stock price. In addition, recent regulatory changes have focused on enhancing the accounting for SPEs and strengthening internal accounting and control systems. We review these issues, beginning with Enron's board. The conflict of interest between the two roles played by Arthur Andersen, as auditor but also as consultant to Enron.
Cendant Corporation had the pressure to comply with their shareholders and to maintain a stable financial status to prove that they were a profitable organization with a bright company image. Another pressure presented in this case for Cendant Corporation was that for the top management once again. The top management needed to have their financial information seem profitable, therefore pressured the accountant of the company to falsify and “cook the books” to make the financial statements seem actually “profitable” when it wasn’t what It really was. As said in the previous question, income smoothing was used in this case by Cendant Corporation as an unethical practice to make the investors believe that their shares were all bright
This concept is what former CEO of Enron, Jeff Skilling, failed to comply with. He put his self-interests ahead of the stakeholders of Enron for personal financial gains. In the film the Smartest Guys in the Room, when Skilling was appointed as CEO, he proposed the idea of incorporating Enron as an energy trader rather than producer (Enron 2005). In addition to adding this new culture to the firm, Skilling knew that because he was able to control the prices of Enron stock he could forge the prices to his own advantage. Therefore, he influenced CFO Andy Fastow to rearrange the account records of Enron to make it appear as if they generated higher profits then previous fiscal years.
2. A book report or summary do not provide the critical analysis, quality evaluation, significance and meaning of a book, whereas a complete book review does. A good book review focuses on the purpose, content of the book, and writer’s authority on the subject matter. However, it should not pass a judgement on the author’s work; rather an educated and thoughtful evaluation which is supported by evidence and reasons. 4.
Ethical dilemma as outlined by Kinicki (2017, p.106), “is a situation in which you have to decide whether to pursue a course of action that may benefit you or your organization but that is unethical or even illegal”. However, there are various ethical approaches that can be used when making ethical decisions. The Utilitarian approach as outlined by Kinicki (2017, p.107), “helps managers to consider the effects of making decisions by deciding how their action would affect others”. For example: in the military the leaders of the reserve often meets with the boss and make decisions based on certain things they would like the reserve to do or hope to achieve but there is never a time where they would meet with the soldiers when making these decisions so that we can have any input. This shows that the boss and his immediate leaders /supervisors are unethical.
Ethical issues in the remuneration of directors An issue or circumstance that requires an association or person to decide between choices that must be assessed as moral and ethical right or wrong and unethical in the remuneration. There are many ethical issues with executive compensation .These include whether the compensation is excessive compared against provision of service and whether the compensation process is compromised by independent transparent negotiation. Issues that can exist in remuneration of directors Executive remuneration has become one of the key issues in corporate governance and the target for criticism by shareholders and academics over the past years. The problem arises where there is a divergence of goals by company
Background WorldCom, once known as one of the most powerful telecommunication organizations of the world, is now studied as a case of a fraudulent company that carried out unethical financial activities to cover its weakening position in the market. After some aggressive investment decisions, the company started to witness huge financial pressure. The management used various forged accounting entries to conceal its weakening position. Cynthia Cooper, Vice President Internal Audit, discovered the unethical activities and raised the issue with the management and relevant departments and received bitter responses. She carried out internal audits in her own capacity with her colleagues and compiled evidence against fraudulent activities.