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Magic Tricks on the Corporate Books

Magic Tricks on the Corporate Books

The article written by Mara Der Hovanesian talks about the different tricks and techniques corporations use to appear more financially fit then they really are. Mara claims that lots of corporations use these ruses among other things to hide a true financial picture from lenders to avoid losing credit and other lifelines. 

Altough this article isn’t about an ethical issue in a strict sense as it more or less only talks about the techniques itself, I yet think that we can connect the topic with some of our discussions in class.

On the one hand I thought about the exaggeration in advertising which is used to persuade people to buy products. The financial statement could be seen as a kind of advertising with which a firm tries to attract potential investors. In tampering with the balance corporations act dishonestly and unfairly.

On the other hand I thought about the broader view of corporate responsibility which says that firms also have obligations to the surrounding community, the society at large. They therefore do also have a responsibility for potential investors to that should not be lied. 

It is difficult to decide if such a behavior is unethical. It’s logical that firms try to make a good impression as they depend on the money from investors. Otherwise it’s false to take the money of investors who, relying on the published information, think that the firm is a good investment. But as long as such techniques are legal every company will keep making use of them. Maybe the corporations justify their conduct with the well-known claim that “Everybody’s doing it”…

Categories: Uncategorized
  1. kherm
    October 26, 2009 at 12:11 pm

    In general I agree with Julia, since the broader view claims not only a corporate responsibility but also the duty to take the overall society into consideration when reaching decisions. For that reason it is morally wrong to use different tricks and techniques to boost your financial statement. In my opinion the broader view is generally the right way of leading a company.
    However, in this context I would use the narrow view to justify the behavior of most companies, since as Julia said, “Everybody’s doing it.” I think it’s just a question of competition. If one company uses those tricks and another company does not, they might not be able to compete anymore and therefore fail in the long run. Finally, the employee would become unemployed and I am not sure whether that would be moral at all. Therefore, I think rules will generally determine the actions of a company whether it is morally wrong or not and it is difficult to judge it, because I am not sure what I would do in the same situation.

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