Effects Of Unethical Behavior Article Analysis

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Effect of Unethical Behavior Article Analysis Effect of Unethical Behavior Article Analysis Creative accounting is not a new accounting practice, but it can be detrimental to the companies that use it. “Businesses feel the pressure to appear profitable in order to attract investors and resources, but deceptive or fraudulent accounting practices often lead to drastic consequences” (Krantz, 2002, para. 1). Internal unethical accounting practices include under and overstatement of revenue, expenses, liabilities, and misuse of capital. External unethical practices include manipulation of financial market regulations, investment and trade fraud, and kickbacks. Enron Corporation is a prime example of these internal and external unethical accounting practices. Enron Corporation was a leading company in the energy sector in the 90’s; a highly successful and growing company employing over 21,000. “Enron’s corporate culture best exemplified values of risk taking, aggressive growth and entrepreneurial creativity. These are all positive values. But these values were not balanced by genuine attention to corporate integrity and the creation of customer – and not just shareholder – value. Because the Enron corporate culture was not well grounded, a single scorecard – maximized price per share of common stock – became its reason for being, and even its positive values became liabilities” (Schuler, 2002, para. 3). Unethical professional values were symptoms of systemic problems for Enron. “Enron’s systems of oversight, ethical disclosure, and corporate accountability were flawed leading to the demise of Enron” (Schuler, 2009, para. 2). In fact, in 1999 Enron directors waived the company’s code of ethics allowing the CFO, Andrew Fastow, to run an investment partnership that traded with Enron. Enron not only committed financial fraud, but it has been alleged that bribes

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