Reporting and analyzing liabilities essay
Reporting and analyzing liabilities is very important for effective management but often reporting of liabilities and the overall analysis of liabilities of corporations raises a number of ethical issues, among which the accuracy of reporting and its transparency is one the main ethical issues. To put it more precisely, managers of corporations may slip into questionable policies concerning reporting their corporations’ liabilities by attempting to hide the true liabilities of their corporations and present the performance of their corporations and their financial position in a better light. In such a situation, the accurate and transparent reporting of the corporation’s liabilities is one of the main ethical concerns of contemporary corporations.
At the moment, the problem of the inaccurate reporting of corporate liabilities occurs in different companies and this problem involves not only legal issues but also ethical ones. Often managers use existing legal gaps to manipulate with reporting liabilities of their corporations (Graeber 1222). As a result, they provide stakeholders with inadequate and inaccurate information about the liabilities of the company. Such a lack of accurate and adequate reporting leads to the deception of stakeholders. For example, investors may be deceived by such inaccurate reporting liabilities. This is why investors may believe that the company performs effectively, but the company may experience substantial difficulties because of high liabilities. Such deception of stakeholders leads to wrong decisions taken by stakeholders (Mindeli & Pipiya 314). However, the negative effects of such misleading reporting of liabilities may be disastrous because the example of deception of investors is just one example of the negative effects of poor reporting of liabilities for stakeholders. In actuality, the lack of transparency and accuracy in reporting liabilities leads to negative effects for all stakeholders.
In such a situation, managers are often the only party that may benefit from reporting liabilities in an inaccurate way. Often managers misrepresent the liabilities of their corporations to improve the performance of their corporations for the public and other stakeholders and to receive bonuses for their positive performance (Shapiro 352). At the same time, managers cannot benefit from the poor reporting liabilities in a long-run perspective because ultimately, the high liabilities will become obvious and the deterioration of the financial performance cannot be hidden from the market and public in the long run unless managers are capable to boost the business development of their corporation.
On the other hand, managers, who slip into the inaccurate reporting of liabilities, tend to use such deception of stakeholders to obtain some financial benefits like bonuses. This is why their major motivation for the deception of stakeholders and manipulation with reporting liabilities of corporations is the prevalence of their selfish interests over the interests and needs of their corporations and other stakeholders, including employees, shareholders, and others. Such selfishness of managers is the major driver of their unwillingness to report the liabilities of their companies accurately and transparently.
At the same time, it is also a part of the corporate ethics and culture because companies often tend to avoid excessive transparency and top managers encourage their subordinates to avoid transparency to protect their corporative interests. However, such corporate ethics is poignant and dysfunctional because it leads to the inaccurate reporting of not only liabilities but the overall performance of the company. Such practices lead to the occurrence of such scandals as was the case of Enron, for example.
Thus, the inaccurate reporting of liabilities is a serious ethical issue that may also lead to negative legal consequences for managers responsible for reporting, but such practices have a negative impact on other stakeholders of corporations. This is why the violation of ethical norms in reporting liabilities is unacceptable.
Works Cited:
Graeber, David. “The Anthropology of Globalization (with Notes on Neomedievalism, and the End of the Chinese Model of the Nation-State): Millennial Capitalism and the Culture of Neoliberalism. Consumers and Citizens: Globalization and Multicultural Conflicts. The Anthropology of Globalization: A Reader”. American Anthropologist. 104 (4), 2002, 1222
Mindeli, L. E. and Pipiya, L. K. “Conceptual aspects of the formation of a knowledge-based economy”. Studies on Russian Economic Development. 18 (3), 2007, 314.
Shapiro, B. “Collaring the Crime, not the Criminal: Reconsidering the Concept of White-collar Crime”. American Sociological Review. 55 (3), 1995, 346–65
