The Boeing Case: Necessary Or Relevant?

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Boeing closed a deal with McDonnell Douglas to acquire another manufacturer. At the time Boeing, did not have the capital to purchase another manufacturer. To get the capital they needed Boeing issued shares of its own stock to Douglas on the agreement that Boeings stocks could not decline beyond a certain level for a certain number of months after the deal or it would be revoked. In this situation Douglas was a major stakeholder because they just acquired a large sum of Boeing stock. Other stakeholders would be individual investors, employees, companies that do business with Boeing, companies that do business with Douglas, stockholders in Boeing and stockholders in Douglas. During the first half of the year Boeing experienced inefficiencies…show more content…
If Boeing released the cost overruns in their quarterly statements the stock price would have dropped and Douglas would have revoked the deal, so timeliness was a major factor in whether the deal would have fell through or not. The full disclosure principle is also relevant because it requires a company to provide information about the company to its investors so they can then make decisions about the company. Lastly the matching principle is relevant because the company was not matching its expenses to its revenue because their statements were inaccurate when they were presenting them to the…show more content…
I would have also told the specific reasoning for the cost overruns and what we as a company are doing to try to fix the issue. I would try to assure the stockholders we have their best interest in mind and that they would be kept up to date on the company’s health. I feel that the investors would have had more faith in the company if we are honest with them and show that we aren’t holding any information from them even if the company did have a bad report. Releasing bad news about the company that happens much earlier in the year will make stockholders lose trust, faith and loyalty in the company which will drive the stock price down even further than if the investors found out the bad news in the first and second quarter reports. If I was chief executive of Boeing I would have told Douglas that the company is suffering cost overruns as soon as I believe it could put the deal in jeopardy, so both of our companies are on the same page and can either revise the deal or Douglas’s company can revoke the deal. Even if Douglas’s company does revoke the deal and the stock price does go down, our investors know we value ethics of the
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