American Accounting Association 2006 Midwest Region Meeting March 30 – April 1 Chicago, Illinois

Friday, March 31, 9:40 a.m. - 10:20 a.m.
Forum Papers

Title: Impact Of Unethical Behavior On Corporate Activities And Financial Outcomes

Dean Elmuti Eastern Illinois University

Henry H. Davis Eastern Illinois University

ABSTRACT: In the recent months and years, confidence level in business has dropped, largely due to corporate ethical issues. Large companies like Enron and WorldCom defied logic by declaring bankruptcy, while their quarterly statements showed no sign of a distress. This paper examines the conflict of interest arising when the firm acts as both internal and external auditor and allows misleading information to be filed. This paper addresses recent legislation, formed to deter this unethical behavior, and it discusses fallout and consequences of corporate collapse on the market and economy. As can be seen with many new reform regulations, the roles of top executive positions are only going to increase in difficulty in the future. Top management is the keys to rebuilding trust in our economic system that has eroded over the course of these scandals during the past few years.

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