Business Ethics: Adelphia Scandal

analytical Essay
1461 words
1461 words

As the turn of the 21st Century evolved, it appeared as if Adelphia Communications Corporation was on a direct path of success; unbeknownst to their investors and the public, they were in reality on a direct path of destruction instead. Unfortunately, Adelphia is not the first major company in the history of the United States’ business world to lose the trust of the American public, but it is certainly one of the most notable ones to do so. As the events surrounding the Adelphia scandal unfolded in full view of the public eye, a multitude of media outlets were there to broadcast the destruction and distrust to the masses leaving many wondering if the term “business ethics” was actually nothing more than just an oxymoron. Throughout this paper, we will discuss the events surrounding the rise and fall of the Adelphia Communications Corporation and identify two of the ethical problems associated with the scandal while applying them to the deontological framework and Immanuel Kant’s Categorical Imperative.
The Adelphia Scandal
The year is 1952 and a young John Rigas purchased a cable company for a mere $300 in Coudersport, Pennsylvania with high hopes of building the company into a successful family owned and operated business (AICPA, 2005, para. 3); a business that would remain unparallel to the rest of its competition. In the late 1990s his dreams came to fruition; John Rigas, along with a few close family members and investors, purchased Century Communications for $5.2 billion and merged the companies together becoming the 6th largest cable company serving more than 5.6 million subscribers (AICPA, 2005, para. 4). Ensuring that the majority of Adelphia’s voting stock and control of the board remained in the hands of f...

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...ournal, 24(2), 183-203. Retrieved on November 19, 2013 from docview/274702092/141F1B825272DA090E0/1?accountid=28844. Markon, J., & Frank, R. (2002, July 25). Adelphia officials are arrested, charged with ‘massive’ fraud – three in the Rigas family, two other executives held, accused of mass looting. The
Wall Street Journal. Retrieved on November 19, 2013 from Pecorino, P. A. (2000). The categorical imperative. Retrieved on November 16, 2013 from Categorical_Imperative.htm
Sevenoaks School. (2011). Deontological ethics. Retrieved on November 22, 2013 from

In this essay, the author

  • Explains that two practicing deontologists may make vastly different decisions based upon their self perceived duty and loyalty even if they were each placed in the exact same scenario.
  • Explains that kant's categorical imperative allows for more flexibility in one’s decision making process by attesting that one should base their decisions off of how they would want others to universally base it.
  • Analyzes how immanuel kant's categorical imperative serves as a guide when applying ethically decision-based framework to different situations, noting that not every situation will arrive at the same conclusion.
  • Analyzes how adelphia communications corporation lost the trust of the american public after the scandal unfolded.
  • Narrates how john rigas purchased a cable company for $300 in 1952 with high hopes of building it into an unparallel family owned and operated business. in the late 1990s, he purchased century communications for $5.2 billion and merged the companies together.
  • Opines that there are a multitude of ethical problems that plague the adelphia scandal, but for the sake of brevity we will only address the following two and access how they each relate to deontological ethics and immanuel kant’s categorical imperative.
  • Explains the purposeful mismanagement of the accounting books to deceive shareholders and increase the company’s stock prices under false pretenses.
  • Explains how adelphia fraudulently excluded billions of dollars in liabilities from its consolidated financial statements, inflated earnings to meet wall street expectations, and concealed blatant self-dealing by the rigas family.
  • Analyzes how the rigas family illegally used public company money for personal use in the form of unauthorized loans and the use of company property/amenities.
  • Analyzes how adelphia employees failed to apply the deontological ethical framework to the illegal use of the public company's money.
  • Cites barlaup, hanne, & stuart, in restoring trust in auditing: ethical discernment and the adelphia scandal.
  • Analyzes how adelphia officials are arrested, charged with ‘massive’ fraud – three in the rigas family, two other executives held, accused of mass looting.
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