Accounting scandal

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Chapter I: Introduction

Introduction

In the past few years, an increasing number of fraud cases and accounting scandals is linked to fierce discourse with respect to ethics and corporate accountability. Business ethics has likewise become a current research subject in science (Agrawal 2003). Discussions concerning corporate responsibility can be examined from different standpoints such as theological, philosophical or economical perspectives, and moreover it is examined in diverse cultural contexts, for instance in the USA and Europe. Business ethics and social responsibility of companies are both issues of great significance; especially linked to global competition (Ali, 2006) in combination with increased instability of companies.

The recent financial crisis has had a lasting negative impact on corporate profits. Companies must satisfy the interests of several stakeholders, such as employees, banks, customers and the community, and at the same time strive to successfully contend with the consequences of the crisis. The European community is concurrently working to provide legal conditions for corporate restructuring for failed or at risk corporations with the aim of sustaining these improvements for all corporations and business people confronted with crisis management.

Aims & objectives

The aim & objective of this research is to define lack of dignity given to the ethics results in high occurrences of scandals in accounting.

Research questions

What are the ethical issues companies facing when occurring accounting scandal?

What are the side effects accounting scandals?

Does the general framework and circumstances of action justify the negative effects of the outcome or should corporate reorganization be rejected as unethical in respect to the dimension of accountability?

Which measures could keep total damage and negative outcomes to a minimum?

Chapter II: Literature Review

The basic ethical accountability of corporations and senior management, both responsible for their own actions and consequences, can be derived from the arrangement of the stakeholder theory as a concept of consequentialism. Thus, fair actions presuppose that the outcome of these operations be assessed. Responsibility is thereby based on the aspect that corporate managers, who are accountable to their corporations (Brown, 2004) must not only be economically viable, but must also optimally satisfy their stakeholders and special interest groups and the society, all of the entities to whom they are accountable. This accountability must also be assumed during corporate restructuring.

Yet, in a crisis, the actions of corporations tend to orient themselves almost exclusively to the goal of reorganization in order to overcome the crisis and re-establish sustained economic viability. In this context, a series of very substantial decisions must be met. Ethical actions, however, always presuppose that the outcome of actions be weighed in advance. Corporate management must be able to accurately estimate the outcome of their actions, even when faced with psychological stress and or fear of loss and lack of information, as the process of corporate restructuring should not be implemented without considering the external effects and outcome of those actions.

The effect of corporate restructuring and a principle accountability vis-à-vis stakeholders should also be incorporated into the restructuring development planning and or the strategic ...