Lehman Brothers
Ethics plays a big part in the downfall of Lehman Brothers. The company was accused of false reporting and rewarding employees for taking part in dangerous risk taking deals. Maybe the downfall of the company would not have been completely preventable but taking the higher road and showing honesty and integrity might have assisted the company in some small way.
While the company’s competitors were feeling the stress of the beginning of the economic downturn, Lehman Brothers should have taken that as a sign to look at the company’s direction and business decisions. Instead, the company decided to deliberately conceal and communicate misleading information to maintain the appearance of business success to the investment community. Lehman Brothers should have taken the fact that their competitors were failing as a sign to look into how they were operating and start reevaluating and revise some policies and procedures. This is where ethical business decision making should have been implemented into the daily practices of the company. Unfortunately, the choice that was made was to disguise the company’s distresses through an accounting device called Repo 105. Although the accounting practice of Repo 105 is legal, it does not report accurate information of a business. This accounting practice assisted in creating favorable liquidity measures on a balance sheet that was a key component for consumer confidence and credit rating agencies.
All of the unethical decision making were practiced by executives and upper management and then viewed and followed by all employees. Employees need to be able to trust their managers and executives and they also want to view their subordinates as role models. Ethics is about making the right decisions based on principle and values. Lehman Brothers did not base their business decisions with ethics in mind and because of those decisions the company’s failure affected the entire economy. One of the first steps of the company should
While the company’s competitors were feeling the stress of the beginning of the economic downturn, Lehman Brothers should have taken that as a sign to look at the company’s direction and business decisions. Instead, the company decided to deliberately conceal and communicate misleading information to maintain the appearance of business success to the investment community. Lehman Brothers should have taken the fact that their competitors were failing as a sign to look into how they were operating and start reevaluating and revise some policies and procedures. This is where ethical business decision making should have been implemented into the daily practices of the company. Unfortunately, the choice that was made was to disguise the company’s distresses through an accounting device called Repo 105. Although the accounting practice of Repo 105 is legal, it does not report accurate information of a business. This accounting practice assisted in creating favorable liquidity measures on a balance sheet that was a key component for consumer confidence and credit rating agencies.
All of the unethical decision making were practiced by executives and upper management and then viewed and followed by all employees. Employees need to be able to trust their managers and executives and they also want to view their subordinates as role models. Ethics is about making the right decisions based on principle and values. Lehman Brothers did not base their business decisions with ethics in mind and because of those decisions the company’s failure affected the entire economy. One of the first steps of the company should