Business Ethics

Discussion #1 The Pressure to Overstate Stock Valuation You have been the Chief Financial Officer (CFO) for a large manufacturing company for 15 years. The Companys fiscal year ends on December 31 and you are finishing the year-end accounts. You have recently been advised by the Chief Operating Officer (COO) of a significant level of slow moving inventory. The inventory in question is now more than nine months old and would normally have been written down some months previously. The shareholders are trying to sell the Company and the Chief Executive Officer (CEO), who is also the majority shareholder, has told you that it is not necessary to write down the inventory in the year-end accounts. You are sure that the CEO wants the financial statements to carry an inflated inventory valuation because he has found a prospective buyer for the Company. The CEO has mentioned to you that if the proposed deal is successful, all employees will keep their jobs and you will receive a substantial pay increase. What are the ethical implications of this scenario and how would you resolve them? What ethical theories support your answer?