Question

An Overview of Financial Management" Please respond to the following: * From the e-Activity, examine ethical behavior within firms in relation to financial management. Provide two (2) examples of companies that have been guilty of ethics-based malfeasance related to financial management and determine why their comeuppance was deserved.

Answer 1

1. Arthur Anderson Case: When the US administration announced its intention to act against Arthur Andersen in 2002 for the role the auditor (Arthur Anderson) and with the allegation of corporate malfeasance in its auditing procedures, the reputation of this famous auditing firm was totally destroyed. The fraud was involving inappropriate accounting and cover up of the Enron’s financial statements so as to put the business in a good light even if it was not doing so well. The Sarbanes and Oxley Act of 2002 was passed as a result of this scam.

2. Tyco embezzlement: The CEO and CFO of Tyco were accused of misappropriating the company's funds for they own individual sumptuous lifestyle. They used business money to purchase luxury homes, lavish vacations and expensive jewellery. As the CEO defrauded the shareholders, the shareholders bore the brunt as the stock prices plummeted and the company made heavy losses to the equity holders.