Ethical Accounting Failure: The Enron Scandal

1381 words - 6 pages

According to Croxford” Ethical accounting failure has continued to occur in multinational companies in spite of the increased legislation, enhanced corporate governance programs, and greater attention on business ethics by the academic community.” (Croxford, 2010) According to his research, (Croxford, 2010) believed “that accounting professional was discriminated against based on their age, culture, gender, and education.” Multinational corporations have been facing ethical failures scandals for many years. For example: One of the biggest financial scandals was the Enron Scandal. According to (Cohen, Pant, & Sharp, 1993) “the mergers and the international development of the Big Six accounting firms have created new classes of problems for their management.” (Cohen, Pant, & Sharp, 1993) There is a great need for multinational public accounting firms to distinctively consider the impact of international culture diversity on employee ethical compassion and decision making. According to researcher (Cohen, Pant, & Sharp, 1993), “the impact of varies cultures also reinforces the need for extensive use of expatriate management training by accounting firms.” (Cohen, Pant, & Sharp, 1993) When managers are trained properly, the decision making process will improve the benefits of the company. In this paper, we will look at research related to how multinational executive compensation should incorporate more control over their corporate governance and programs, better performance of audit and quality controls, and ethical decisions in multinational countries. The gap in the literature showed poor signs of commitment in management as it is related to business ethics. Research finding shows the agency theory has been the primary foundation for research in the relationship between firm performance and executive compensation. According to (Atchinson), “The agency theory holds executive officers of a firm responsible for their acts.” (Atchinson) Managers tend to act in their own self-interest in conflict with the interests of owners who seek to maximize the value of their investment. The methodology test type that I like was data collected from varies industries using the ownership structure and instructional environment.
Literature Review:
Corporate Governance
First in the research are corporate governance and how corporate governance works. Corporate governance is mostly viewed as both the structure and the relationships which determine corporate direction and performance. What is Corporate Governance? Corporate governance is a gathering together of a group of people around a board table to make high-quality sound decisions on behalf of the company and its stakeholders. Corporate governance framework also depends on the legal, regulatory, institutional and ethical environment of the community. Corporate governance should put policies and regulations in place for multinational companies that are rewarding for the benefit of the company. Such policies can...

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