Question

Companies use complex systems to control and evaluate managers’ actions. Unfortunately, these systems and controls unwittingly create incentives for managers to sometimes take unethical actions.

Select a company and identify and briefly discuss two ethical challenges to that company.

kindly provide an professional answer

Answer 1

There are many companies in world that issues very complex system to control & evaluate the managers action. This system may create various ethical challenges to the company.

But two most significant ethical challenges would be

A. COOKING of FINANCIAL records

B. Misappropriation of business Assets.

A. Cooking of financial records

Manager may provide false picture of the business and its results by overstating assets and understating liabilities in order to get more compensation if the compensation is based on earning or turnover. This type of cooking of records will be adversely effects the shareholders and potential investors.

B. Misappropriation of business assets.

The manager may use private jet given for business purpose to travel for family vacation.

Cash custodian may use cash received from current customers to hide the theft of cash from previous customer

The company must have performance base incentives system to control and motivate the manager performance like incentive system combines % of revenue and stock prices.