Question

Fortune magazine ran an article titled "New Ethics or No Ethics? Questionable Behavior Is Silicon Valley's Next Big Thing," which recounts stories of Internet companies that aggressively inflate their revenues, delay the recognition of expenses, and report sales that are not exactly sales. In many cases, the actions of these companies, while aggressive, are not in direct violation of generally accepted accounting principles. Discuss why companies might engage in such behavior and comment on the ethical implications.

Answer 1

Step-by-step explanation:

Companies that use this "make-up accounting" methodology to demonstrate a good image to stakeholders, which means a strategy to win new investments due to the good performance shown.

However, there are legal and ethical implications that could completely destroy the company's image if such business behavior were exposed.

It is necessary that companies have a strategic plan that aims at actions that understand the long-term success of the company, through legal means of reaching objectives and demonstrating results to investors, because in an increasingly competitive and globalized world, ethics , business reliability and transparency are the factors that guarantee the company's permanence in the market.