Was the incentive plan devised by the companys management

Assignment Help Financial Management

Reference no: EM131301475

Ethical Dilemma. The management of a publicly traded manufacturing company is reviewing the projected fourth quarter financial results in late November. Based on the projected sales, they will fall short of their yearly profit goals. This will result in the company's executives and managers not receiving their year-end bonuses. The management discusses how sales can be increased sufficiently to produce results that will qualify the executives and managers for year-end bonuses.

A decision is made to notify all customers that if they will agree to accept shipments for first-quarter orders prior to the end of the fourth quarter, the company will agree to pick up the shipping costs. The company's controller and CFO review the plan and agree that it is within acceptable guidelines of Generally Accepted Accounting Principles (GAAP). The plan results in a significant increase in both sales and net income despite the company's increased shipping costs. The increase is sufficient to warrant payment of bonuses to the executives and managers, and also results in a significant increase in the company's stock price.

a. Was the incentive plan devised by the company's management for the purpose of increasing sales and profits to a level justifying bonuses ethical?

b. Discuss any negative impact that this incentive program could have for the company and its shareholders in the future.

Reference no: EM131301475

Questions Cloud

Draw conclusions about the material you have presented : Draw conclusions about the material you have presented. The opinions or judgments you present should be supported by your research.

What are some advantages of this lifestyle : What are some advantages of this lifestyle? What are some disadvantages? Does the idea of off-grid living hold any appeal for you, personally? Why or why not? What environmental problems would living off the grid potentially impact?

Develop another pattern of train movement : Typically laboratory space is limited, so keep in mind that the smaller gauge model trains will require less space for the track layout.

Evaluate alternatives to the company self-hosting the site : CPT 264 Website Migration Project. Discuss what it will take to build a Web architecture, move an existing Website with minimal downtime, and provide a disaster recovery solution to ensure the site is always available. Evaluate alternatives to the ..

Was the incentive plan devised by the companys management : Was the incentive plan devised by the company's management for the purpose of increasing sales and profits to a level justifying bonuses ethical?

Design your own video game with graphics : Keep the graphics simple so that the design will fit on the FPGA chip. If the video game needs a random number generator, information on random number generation can be found in Appendix A.

Discuss credit default swaps and effects it had on crisis : Read the "Global Economic Crisis" story on p. 212. Discuss the credit default swaps and the effects it had on the financial crisis.

Worker alternative employment : Given this problem's setup, what would the worker be willing to pay to rent the production technology? Lastly, how would what the worker would be willing to pay to rent the production technology change if the worker's alternative employment gave h..

Draw a more detailed ball in the bouncing ball example : Make a Pong-type video game by using pushbutton input to move a paddle up and down that the ball will bounce off of.

User Account

All Pages