Merck Case
Class 2
The difference between what the public thinks it is getting in audited financial statements and what the public is actually getting is known as: Expectations gap Which corporate report discusses subjects that include environmental, health and safety, philanthropic and other social impacts?
Corporate social responsibility report
According to the authors, ethical corporate behavior is expected to lead to:
Higher profitability in the long-term
The following would be a key control function of the Board of Directors:
All of the above
Professional Accountants, in their fiduciary role, owe their primary loyalty to:
The general public
The following is the most important factor in having an effective ethical corporate culture:
Tone at the …show more content…
Changes to cure the disease and how close to success matters, but are less critical than profitability in the pyramid of social responsibility.
Question 7 - How does Merck's value system fit into this decision (not covered in class?)
Based on the pyramid of social responsibility, Merck is required to be profitable (base). Since the research of development will never be profitable to shareholders Merck should do develop the drug.
Based on Merck’s actual value system, it wants to be ethical and even be a good corporate citizen. So Merck should conduct the research.
Question 8 - If you were the senior executive of Merck, what would you do? (Open question)
I would make assessment of the potential costs to develop the drug. If the estimated costs are above the acceptable level, I will not recommend to make the investment. If not, I will recommend the board to think about it.
Class 6
3. What was the prime motivation behind the decisions of Arthur Andersen’s audit partners on the Enron, WorldCom, Waste Management, and Sunbeam audits: the public interest or something else? Cite examples that reveal this
The difference between what the public thinks it is getting in audited financial statements and what the public is actually getting is known as: Expectations gap Which corporate report discusses subjects that include environmental, health and safety, philanthropic and other social impacts?
Corporate social responsibility report
According to the authors, ethical corporate behavior is expected to lead to:
Higher profitability in the long-term
The following would be a key control function of the Board of Directors:
All of the above
Professional Accountants, in their fiduciary role, owe their primary loyalty to:
The general public
The following is the most important factor in having an effective ethical corporate culture:
Tone at the …show more content…
Changes to cure the disease and how close to success matters, but are less critical than profitability in the pyramid of social responsibility.
Question 7 - How does Merck's value system fit into this decision (not covered in class?)
Based on the pyramid of social responsibility, Merck is required to be profitable (base). Since the research of development will never be profitable to shareholders Merck should do develop the drug.
Based on Merck’s actual value system, it wants to be ethical and even be a good corporate citizen. So Merck should conduct the research.
Question 8 - If you were the senior executive of Merck, what would you do? (Open question)
I would make assessment of the potential costs to develop the drug. If the estimated costs are above the acceptable level, I will not recommend to make the investment. If not, I will recommend the board to think about it.
Class 6
3. What was the prime motivation behind the decisions of Arthur Andersen’s audit partners on the Enron, WorldCom, Waste Management, and Sunbeam audits: the public interest or something else? Cite examples that reveal this