Tyco International Ltd.
February 24, 2011
According to the Securities and Exchange Commission (SEC) “From 1996-2002 Tyco International Ltd. (Tyco) violated the federal securities laws by overstating its reported financial results, smoothing those reported earnings, and hiding vast amounts of senior executive compensation and a large number of related party transactions from investors. To achieve those goals, the company utilized a number of improper practices conceived, guided, or encouraged by the individuals who managed the company at that time.” Tyco Chief Executive Officer (CEO) Dennis Kozlowski (Kozlowski), Tyco Chief Financial Officer (CFO) Mark Swartz (Swartz), and Tyco Corporate Counsel Mark Bilnick (Bilnick) were listed in this indictment.
It is difficult to characterize the style of corporate management in light of many egregious acts perpetrated by Kozlowski, Swartz, and Bilnick, in their decision-making roles as managers. But indirect influence in this case involved leader influence over the organization culture, which is defined as shared beliefs and values of members Yukl (2006, p.7).
Contributory factors leading to Tyco’s failure included:
* improper accounting practices that did not comply with generally accepted accounting practices (GAAP), not only by Tyco but by some of the companies Tyco acquired.
* lack of self-checks and compliance plans. These are only as good as organizational culture and leadership, and it is apparent by their actions that the CEO, CFO, and Corporate Counsel of Tyco failed in their fiduciary responsibilities as directors and officers as described by Cheeseman (2010).
* failure of Duties as Board Members -Acting on behalf of Tyco, Kozlowski, Swartz, and Bilnick failed in their Duty of Obedience –“Duty to act within the authority conferred by statute, article of incorporation, bylaws, and resolutions adopted by the... [continues]
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