Discussion While many people consider finance to be strictly about money, there

Question

Discussion

While many people consider finance to be strictly about money, there are a number of outside influences – behavioral and societal – that play a role in financial management. The global economic crisis, corporate scandals, and regulatory changes have all played a role in how finance is done.

Why is ethical behavior so critical to the practice of finance? Cite one or more examples of financial managers/corporate executives who were exposed for unethical business practices. What were the repercussions of their actions?

Please answers this question complete and as accurate as possible! Thank you!

Explanation / Answer

Why is ethical behavior so critical to the practice of finance?

Ethical behavior is critical practice of finance because at certain executive positions it seem easy to steal money from the company for the benefit of few, leaving the majority of employees without a place to work because companies file for bankruptcy

Cite one or more examples of financial managers/corporate executives who were exposed for unethical business practices. What were the repercussions of their actions?

One of the biggest example of the past years is the Enron scandal:

Enron inflated their trading revenue, used the mark-to-market accounting method which created discrepancies and misled the investors. They used “special purpose entities’” to keep their debt a secret, the company even hired people to work around the loopholes of the GAAP

Jeffrey Skilling (chief executive) hired accountants to do poor financial reporting to hide debt.

Andrew Fastow (CFO) mislead the board of directors and audit committee on financial issues.

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