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Errects of Unethical Business Behaviors

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Submitted By yiayIA117
Words 499
Pages 2
Effects of Unethical Behavior
Anita Pleasant
ACC/291
March 10, 2014
J. Leanne Janis

Is the Sarbanes-Oxley Act Working? Today’s corporate executives are well aware of the consequences and punishments they face since the enactment of the Sarbanes-Oxley (SOX) Act in 2002, but is the law enough of a deterrent for senior management? Over the past decades many CEO’s have risen to their positions with little training in accounting or finance, and it makes one wonder about the type of decision-making process these non-accountants employ when making financial reporting decisions. The SOX Act was implemented to protect the financial markets in the United States by encouraging corporate officers to become more involved in financial reporting decisions, and holding them more responsible for the data within each financial statements their company issues (Maroney & McDevitt, 2008). Can these in individuals without the necessary accounting training understand and make the accurate financial statement adjustment decisions required by the SOX Act? The Tyco International scandal is a prime example of how a chief executive officer (CEO) who obtained his position by rising up through the company used unethical behaviors which almost destroyed the organization. Even though the scandal occurred before the SOX Act was enacted, it demonstrates how unethical behaviors can affect a business. Dennis Kozlowski started working for Tyco in 1975 as an assistant controller; he joined the board in 1987, and became president and chief operating officer 1989. In 1992 he staged a coup and became CEO followed by chair of the board in 1993. Mr. Kozlowski’s business practices lead the Securities and Exchange Commission (SEC) to inquire into Tyco’s and resulted in a restatement of the company’s earnings (Neumann, 2011). Dennis Kozlowski used Tyco’s revenues as if they were his, taking a

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