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Ethical Behaviour

Satisfactory Essays
For most organizations, values statements are simply rhetoric that sits on a fancy plaque on the wall. The real values are seen in the halls, not on the walls. High performing organizations are clear about their values and about what they translate into in day-to-day behavior. They use their values strategically, to guide every decision and action.

The challenge with values is that they are usually vague concepts that have different meanings to different people. Every person usually has a strong sense of what typical values (trust, hard-work, etc.) mean, but the definitions different people have for the same value are usually not the same.

Most people, for example, may say they have integrity. If asked what integrity means to him or her, what is found is that the internal definition each person has is unique. Thus, while two people may seem to agree on the concept, they may come into conflict when in comes time to put that value into practice in day-to-day action. Although some choices seem common sense to us, others take the less traveled road.

Financial reporting is the latest area hit with the ethical bug. On November 8, 2001, people were shocked when one of the hottest companies of the booming nineties, Enron, admitted to using accounting practices that had inflated its income figures by $586 million over a four-year period (Kadlec, 2002). Less than a month later, Enron filed Chapter 11 bankruptcy, and early in 2002, the Justice Department launched a criminal investigation into the company’s practices. Investigators wanted to determine how much executives knew about the company’s status, as they told their employees to hold their shares of Enron, but sold more than $1 billion of their own (Kadlec, 2002). The company went belly-up, employees’ retirement savings were all but wiped out, and millions of investors lost a total of more than $60 billion (Thomas, 2002). People began to worry.

A few months later, on March 27, 2002, Adelphia Communications announced that it also had financial problems. Founder John Rigas, along with his three sons were accused of using company assets as collateral for loans totaling $3.1 billion to make personal purchases and finance family projects (Lieberman, 2002). The Rigases were removed, the company restated its earnings and later filed Chapter 11 bankruptcy. The value of the stock plummeted, and on June 3, 2002, Adelphia was delisted from NASDAQ (Lieberman, 2002).
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