American International Group, Inc. (AIG) reported bogus transactions that hid losses and inflated its net worth. AIG inflated reserve funds that were to be used for paying claims by millions of dollars and that AIG's CEO Maurice Greenberg repeatedly directed AIG traders late in the day to buy AIG shares to prop up its price. However, aside from AIG’s corporate financial reporting errors or outright fraud, the companies ethical culture begin to fail because the company seemed to have a decentralized organization. A mix of Individual divisions and departments recklessness and power to define their own corporate governance, and a CEO who was secretive and manipulated the numbers, all were a formula for an unethical corporate culture.
Coping with Financial and Ethical Risks at American International Group (AIG)
Discuss the role that AIG’s corporate culture played in its downfall? The first question asked about how this whole debacle happened. I agree their corporate culture played a major role in its downfall. However, the bigger picture was how quickly everyone, and I mean in the end everyone, all the stakeholders, which in the end the way these complex theories of how to make air collateral, never got any real explanation on why it was allowed to happen when in the end some profited, but most lost, and lost really big.
According to Bethany McLean and Joe Nocera, two of America's most acclaimed business journalists, The financial crisis blame had several players. From greedy traders, misguided regulators, sleazy subprime companies, spineless legislators, and clueless home buyers, the list is long and depressing the more you read (McLean & Nocera, 2010).
However, because of AIG occupied such an important role in the financial system. It became one of the companies that once the curtain was pulled back, the signs of imminent disaster were evident, and... [continues]
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