In 1995, BusinessWeek ran a cover story entitled “Blind Ambition: How the Pursuit of Results Got Out of Hand at Bausch and Lomb.” The two-part article details a number of games Bausch and Lomb (B&L) managers played to artificially achieve short-term results at the expense of long¬ term value.

The “numbers-oriented” culture at B&L was far from unique as evidenced by the high-profile accounting scandals that occurred during the past decade. Since then, numerous reforms, including the Sarbanes-Oxley Act of 2002, have been implemented to improve the corporate reporting environment.

Required

1. Find BusinessWeek s Blind Ambition” article on the Internet. Read it and list five specific examples of actions that B&L managers took to artificially boost short-term results.

2. Were the actions taken at B&L unethical, illegal, or both? What was the likely impact on long-term results and stockholder value?

3. Explain how the corporate culture at B&L may have contributed to managers’ pressure to achieve budgetary results.

4. How did the bonus and compensation systems affect the behavior of individual B&L managers?

5. Conduct an Internet search on the Sarbanes-Oxley Act. What was its intent? Did it include any requirements aimed at improving corporate culture as a means to reduce fraudulent reporting?