Case Study
I am concerned about the company’s treatment of analysts who cover the stock pretty much, for it relates to my employment and reputation. And from this case, I would not want to be an analyst covering Biovail. The following statements will contribute to my opinion.
To begin with, Biovail has a bad management control and company culture. According to the case, it seems that Biovail utilizes an aggressive accounting system, together with an insufficient disclosure. In the April 2002, Treppel found that the earning quality of Biovail was low and the accounting information was unclear. And the truck accident demonstrates that the top of Biovail did not comply with the GAAP and tended to inflate the revenue. What’s worse, after Treppel writing a ‘sell’ recommendation, Biovail repudiated its inappropriate accounting by issuing an argument to public. These can give us a picture of the dishonest culture and control. Moreover, during the process of deal with the Distributor, a unsymmetrical information exists internally. Crombie had no idea of the email sent from Distributor to verify the contract. This shows the management control system within Biovail is immature, for Biovail lacks an effective communication between colleagues. Based on this issue, I am really worried about the report that Biovail provides are fair and true. If not, it will cause an ethical dilemma to me.
Secondly, I am an analyst with strong sense of responsibility and integrity. Being a professional analyst, I’m fully aware that I should disclose everything that I see and give the report objectively and fair. If there is enough evidence that Biovail had misleading financial statements, I have to tell the truth to the public and make the ’SELL’ recommendation. However, doing like that might drag me into an uncomfortable situation. The past treatment to Treppel from Biovail makes me concern about my employment. When Treppel doubted about the information disclosed by Biovail and wrote a ‘sell’
To begin with, Biovail has a bad management control and company culture. According to the case, it seems that Biovail utilizes an aggressive accounting system, together with an insufficient disclosure. In the April 2002, Treppel found that the earning quality of Biovail was low and the accounting information was unclear. And the truck accident demonstrates that the top of Biovail did not comply with the GAAP and tended to inflate the revenue. What’s worse, after Treppel writing a ‘sell’ recommendation, Biovail repudiated its inappropriate accounting by issuing an argument to public. These can give us a picture of the dishonest culture and control. Moreover, during the process of deal with the Distributor, a unsymmetrical information exists internally. Crombie had no idea of the email sent from Distributor to verify the contract. This shows the management control system within Biovail is immature, for Biovail lacks an effective communication between colleagues. Based on this issue, I am really worried about the report that Biovail provides are fair and true. If not, it will cause an ethical dilemma to me.
Secondly, I am an analyst with strong sense of responsibility and integrity. Being a professional analyst, I’m fully aware that I should disclose everything that I see and give the report objectively and fair. If there is enough evidence that Biovail had misleading financial statements, I have to tell the truth to the public and make the ’SELL’ recommendation. However, doing like that might drag me into an uncomfortable situation. The past treatment to Treppel from Biovail makes me concern about my employment. When Treppel doubted about the information disclosed by Biovail and wrote a ‘sell’