Total Questions : 1
You are the CEO of XYZ Corporation, a multinational conglomerate. The company appoints a new manager, Mr. Rakesh, known for prioritizing short-term profitability and cost-cutting measures. Under his leadership, the company's financial performance improves, but ethical concerns arise.
Mr. Rakesh implements strategies that include capital infusion through debts and over pressurising the employees to work, resulting a significant increase in company’s profitability. Through his policies Company’s shareholder value started increasing and very soon, Mr. Rakesh earns a good reputation image in the eyes of the Board of the directors.
Gradually, the employees start leaving the company. During the initial inquiries you come to know that its Rakesh’s unruly behaviour because of which the employees are leaving. You also come to know that the policies of Rakesh will boost the profits for a short term, but they’re not suitable for sustainability in the long run. The cosy picture that Mr Rakesh has presented is not entirely true. He manipulates financial statements using regulatory loopholes, artificially inflating the company's profitability. This practice attracts investors but questions the accuracy and transparency of financial reporting.
What are the ethical issues involved and what options are available to you to handle this situation?GS Paper 4 Case Studies