Question
The Pressure to Overstate Stock Valuation Clara has been the Chief Financial Officer (CFO) for a large manufacturing company for 15 years. The Company's year-end
The Pressure to Overstate Stock Valuation
Clara has been the Chief Financial Officer (CFO) for a large manufacturing company for 15 years. The Company's year-end is March 31 and she is finishing the year end accounts.
Clara have recently been advised by the Chief Operating Officer (COO) of a significant level of slow moving stock. The stock 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 Clara that it is not necessary to write down the stock in the year end accounts. Clara is sure that the CEO wants the financial statements to carry an inflated stock valuation because he has found a prospective buyer for the Company. The CEO has mentioned to Clara that if the proposed deal is successful, all employees will keep their jobs and she will receive a substantial pay increase.
What are the ethical implications of this scenario and how should Clara resolve them? Are there any ethical theories might support Clara's answer?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started