Tactical Decision Making

Tactical decision making is becoming much more prominent with the renewed stress on ethics and ethical behavior, especially in the world of accounting. Corporate ethics are taking center stage within the business world due to the various accounting scandals and their consequences. Some examples of these scandals include Worldcom, MCI, Enron, and Arthur Andersen. Since these incidents took place, the government has implemented various new regulations that are designed to deter and prevent fraud and unethical behavior, but it is up to the corporations themselves to think tactically and base their operational decisions on specific ethical tactics.

The goal of corporate entities is to “maximize the value of the shareholders legally, ethically, and on a sustainable basis, while ensuring equity and transparency to every stakeholder” (Norwani, 2011, 207). Within the context of this goal, companies run into issues when executives stand to gain, whether financially or strategically, if they can drive stakeholder value up, whether it is up to company expectations or beyond them. An example of this conflict is allowing executives and managers to earn their compensation or bonuses based on how well the company does and how much it shareholder value it can maximize.

Companies typically provide financial information to their investors, along with any additional data that can assist them in making educated decisions regarding their investments. While financial statements are an advantageous tool, they become useless if investors and other external users are unable to rely on the accuracy of the information contained in them. Enron, for example, inflated its profits in an attempt to make investors believe that their investment was profitable, ...

... middle of paper ...

...(9): pp783-789.

Norwani, Norlia Mat, Mohamad, Zam Zuriyati, and Ibrahim Tamby Chek. (2011). Corporate Governance Failure and its Impact on Financial Reporting Within Selected Companies. International Journal of Business and Social Science. Vol. 2(21): pp205-213.

Preston, Alex. (18 July 2011). “News Corp could go the way of Enron if the contagion isn't contained.” New Statesman. Vol. 140(5062): pp21.

Rego, Amernio, Leal, Susana and Miguel Cunha. (December 2011). “Rethinking the Employees' Perception of Corporate Citizenship Dimensionalization.” Journal of Business Ethics. Vol. 104(2): pp. 207-218.

Shirur, Srinivas. (July-September 2011). “Tunneling vs. Agency Effect: A Case Study of Enron and Satyam. Vol. 36(3): pp9-26.

Ye, Kangtao and Ran Zhang. (December 2011). “Do Lenders Value Corporate Social Responsibility? Evidence from China.” Vol. 104(2): pp197-206.