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CT2 9

Boeing was experiencing cost overruns but tried to time the release of this information to diminish its effect on stockholders. As the CEO, it would be more ethical to announce the overruns as soon as possible and explain how management plans to address the issues in order to maintain trust with investors and analysts. Timing the release of negative financial information implies the potential for future manipulation.

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78 views1 page

CT2 9

Boeing was experiencing cost overruns but tried to time the release of this information to diminish its effect on stockholders. As the CEO, it would be more ethical to announce the overruns as soon as possible and explain how management plans to address the issues in order to maintain trust with investors and analysts. Timing the release of negative financial information implies the potential for future manipulation.

Uploaded by

zZl3Ul2NNINGZz
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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CT2.

a. Who are the stakeholders in this situation?


Boeing’s stockholders, Boeing’s management team.

b. What are the ethical issues?


Trying to “time” the cost overruns news.

c. What assumptions or principles of accounting are relevant to this case?


Financial report should be periodic and on specific date of each year.

d. Do you think it is ethical to try to “time” the release of a story so as to diminish its effect?
It definitely not ethical to manipulate financial report.

e. What would you have sone if you were the chief executive officer of Boeing?
I would announce the cost overrun as soon as possible. Explain the causes and how
management team are going to respond and recover.

f. Boeing’s top management maintains that it did not have an obligation to reveal its problems
during the first half of the year. What implications does this have for investors and analysts who
follow Boeing’s stock?
Analysts could imply that Boeing might manipulate the report again leading to potentially lost
company’s trust.

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