Corporate Governance and Scandal: A Case Study of Equifax's Data Breaches

This report examines the case of Equifax's data breaches and analyzes the implications for corporate governance. It discusses the impact on stakeholders and evaluates the approaches from normative and descriptive ethics theories. Recommendations for improving corporate governance are provided.

Report Based on Business
Scandal

Table of Contents
Introduction......................................................................................................................................3
Overview of case....................................................................................................................3
PART 1............................................................................................................................................3
Corporate Governance............................................................................................................3
PART 2............................................................................................................................................5
Evaluation of approaches of case with respect to perspective of normative & descriptive ethics
theories for business...............................................................................................................5
PART 3............................................................................................................................................7
Analysis of stakeholder perspective.......................................................................................7
Conclusion.......................................................................................................................................8
Recommendations............................................................................................................................8
REFERENCES................................................................................................................................9

Introduction
Corporate governance refers to process of aggregation of processes, laws or rules through
which businesses are regulated, controlled or operated. This term comprises of internal and
external elements that creates an impact in interest of firm’s shareholders (Aggarwal, Schloetzer
and Williamson, 2019). Generally, board of directors of firm are liable for development of
framework for corporate governance that as they will align objectives of businesses in an
adequate way. They are peculiar processes that outline corporate governance which involves
action plan, performance measurements, dividend policies, disclosure practices, compensation
decisions, etc. This report comprises of an instance of corporate strategy that is based on
Equifax’s Data Breaches.
Overview of case
Equifax is one of the three largest credit reporting agency across United States. In
September 2017, the system of firm was breached and personal information of around 140
million Americans got compromised. This breaching comprised of data of customers such as
social security numbers, address, names, licence numbers, date of birth, etc. The major loss was
information of credit cards and it is of around 209,000 clients as well as customers. This breach
is regarded as highly severe. Various scandals have been occurred in past but as personal
information of people is compromised by Equifax then it is regarded as major. This leads to
diminish goodwill of as well as reputation in the marketplace.
PART 1
Corporate Governance
The system of rules, processes, regulations and practices which aids firm within directing
as well as controlling distinct business tasks and activities is referred to as corporate governance.
This comprises of balancing interest of executives, suppliers, government, financers,
stakeholders and many other aspects of organisation (Aguilera, Marano and Haxhi, 2019). The
adequate corporate governance renders framework for attainment objectives and goals. This
involves various policies, rules, resolutions, controls and regulations that are put in a place to
dictate wide range of corporate behaviour. There exist two kind of major stakeholders which
directly creates an impact on governance like shareholders and proxy advisors. The key
components within investor relations as well as community while interaction of corporate

governance of firm. This aids within creation of transparent sets of rules and regulations for
controlling stakeholders and different executives for aligning their incentives and profits
(Arnold, Beauchamp and Bowie, 2019). With reference to Equifax, it has been observed that
aspects related with adequate corporate governance are not being followed by them. The Equifax
breach has seen attention from federal, local and state government within Canadian as well as US
regulators. The breach has impacted distinct governments, this is specified beneath:
Local government: Francisco and Chicago have sued Equifax. As per complaint that is
being done by San Francisco, it alleges that firm have violated lawful, carried out unfair and
fraudulent business practices across California. Company is being blamed for not implementing
adequate security practices within their firm. Along with this, timely information related with
breach was not given. There was reimbursement for customers of California those who
purchased services for credit monitoring from Equifax. This occurred due to announcement of
breach as there was around $2500 for each violation of law. There is need of court order for
execution as well as maintenance of adequate plans as well as plans for security.
State Government: The State Attorneys was active when breach occurred and there was
enforcement of actions which were taken against Equifax. This complaint was related with
violations of data privacy laws of Massachusetts as well as consumer protection laws. Attorney
General of Massachusetts has brought in Stops Hacks which was with respect to improvisation
within Electronic data security act. This bill requires a business that is liable for holding sensitive
or private information of population of New York for opting technical, physical and
administrative safeguards. This comprises of expansion of kind of data that triggers needs of
reporting (Black and et. al, 2019).
Federal Government: Various investigations are conducted by government and Federal
Trade Commission has made confirmation with respect to strong examination for Equifax
breach. Other community which is carrying out research on this is consumer financial protection
bureau. This investigation is being conducted for insider trading which is related with stock sales
before breach took place.
In United States, government has indicated that there are some military members of
China on charges as they are responsible for hacking as well as exploiting personal data and
information of around 150 million people (Collier, 2018). They have conspired to hack into
Equifax’s computer networks that kept unauthorised access for systems of Equifax as well as

stole private data of American customers. This case clearly illustrates misconduct of corporate
governance in organisation. This is important for firm to opt for some rules and regulations for
managing work. This aids within carrying out work in an adequate way.
PART 2
Evaluation of approaches of case with respect to perspective of normative & descriptive ethics
theories for business
Ethics refers to term which deals with standards and principles of morality for doing tasks
and activities ethically right. This comprises of rights and responsibilities of living entities. The
different theories related with business ethics are specified beneath:
Teleological ethical theory
These theories are related with outcome of actions which denotes basic standards for
actions that are right or wrong morally depending on good or evil that is being developed (Crane
and et. al., 2019). There are different theories with respect to this, they are:
Ethical Egoism: As per this, actions are being conducted as good if they are producing as
well as rendering significant results that will enhance self interest of people. From this theory, it
has been concluded that this is moral for promotion of one’s own good. But when personal
interest is being avoided and good work for others is done then it is good. Ethical egoism differs
from psychological egoism as this implies that individuals are self motivated as well as self
centred and actions are being conducting for attaining maximum profit. With respect to Equifax,
they must have emphasised on serving clients in an effectual way by which their information
would be secured.
Utilitarianism: This theory illustrates that business actions are good when results render
enhanced satisfaction for maximum people. It reflects that management of organisation must
develop adequate employee vacation annually to honour preferences. With reference to Equifax,
it has identified that business activities that are carried out must have some regulations through
which needs of employees and customers can be accomplished.
Eudalmonism: According to this theory, business actions are good in case they render
enhanced results in attainment of welfare of individuals and organisational goals. Business
activities will be fruitful when constructive goals are promoted (Crifo, Escrig-Olmedo and
Mottis, 2019). For Equifax, it is important that they provide employees adequate training as well

as adequate knowledge standards while they deliver their services. The moral theory will aid
within maintaining right and wrong actions that are entirely dependent on consequences which
will occur.
Deontological ethical theory
They reflect actions which are morally right as well as independent of consequences. The
different theories associated with this are:
Negative and Positive Rights theories: According to negative rights theory, business
actions are right in case they protect people for harm or any kind of illegal activity which
interferes with distinct individuals (Daniels and Morck, 2019). The positive right theory is liable
for reflecting that individual is right if they are able to accomplish their demands. This is crucial
that all firms acknowledge good or bad for them that will furnish clear insight into what will be
consequences of actions carried out by them within business.
Social contract theories: The individual contract with others is carried out by abiding all
the moral and political obligations for society. When there are no laws as well as orders within
the society, it denotes that there is unrestricted freedom. It means that there are wide range of
cases where people have unlimited freedoms even avoiding misdeeds.
Social Justice Theories: As per this, business actions are right in case where there exist
confirmation with respect to fairness within redistributive, compensatory and distributive
dimensions of costs and rewards (David and James, 2019). It is associated with distributive
dimensions as well as having apparent fairness with respect to distribution of social benefits.
This theory is dependent on rightness or wrongness of actions that are conducted.
With reference to Equifax, it can be concluded that it is necessary for firm to follow
different social factors while management of their business activities. Along with this, in order to
work in an adequate manner all the social concerns must be followed for management of
activities as well as tasks.
Virtue Ethical theory
This kind of theory gives details associated with ethical values of person that are
determined by their character. Different ethics associated with this are mentioned beneath:
Individual character ethics: According to this, character of every person is dependent on
ethics of identification as well as development of traits possessed by human beings. This aids

within estimation of intrinsic values of ethical communication which takes place with human
beings.
Work character ethics: According to this, the identification and development of
reflective, noble and practitioner traits while working are dependability, honesty, loyalty, etc. It
is crucial aspect when global competition is being faced (Jacoby, 2018).
Professional character ethics: This comprises of self regulation as well as loyalty
services which approximate intrinsic ethical qualities of individuals. It is related with some
communities and is explained through usage of example, like in case a doctor finds that
operation theatre’s bill is doubled, and then this is ethical responsibility of doctor that they
inform it immediately to hospital’s management. In case if no actions are being taken then they
have right to inform to public about misconduct which is being conducted within organisation.
The ethical theories of virtue are dependent on formulation of sound character (Aggarwal,
Schloetzer and Williamson, 2019). This is supportive for Equifax to build up substantive
foundation for actions which are being conducted by their business. When employees work
within firm and have strong character i.e. intellectual, moral, emotional and social virtues for
attainment of self discipline for doing adequate things then it will be affirmative for organisation.
PART 3
Analysis of stakeholder perspective
Equifax is major credit reporting agency which is also referred to credit bureaus. Their
primary liability is to formulate reports of individual that will aid them provide adequate and
detailed information of credit history. The credit report comprises of collection of information
from customers as well as clients. These customers can be employers, landlords, credit card
companies, consumers and businessmen. When individual apply for credit then leader must
render credit reports from Equifax by which they can acknowledge credit history by repaying
debts. The offers can be extended by lender and significant interest rate is being furnished to
individuals (Aguilera, Marano and Haxhi, 2019). Landlords are provided with reports related
with credit before, it is decided to expect tenant. Stakeholder analysis with reference to Equifax
is illustrated below:
Stakeholders Perspective on business behaviour
Customers Clients and customers are provided with reports of their credit. When breach

occurred, information of customers was leaked. This created an impact on
loyalty and trust of employees towards offerings given by Equifax. This is the
liability of firm to make sure that data of customers is secured as well as safe.
Due to this, firm went through various problems while reformulating trust
among their customers.
Managers &
Employees
Employees and managers of Equifax are impacted through breach which
occurred within Equifax. Due to this, market reputation of organisation went
down and employees have lost their jobs (Arnold, Beauchamp and Bowie,
2019). Management of firm is accountable to ensure that all their employees are
safe when they deliver their services. But within Equifax breach of information
took. This created a strong influence workforce of Equifax.
Government Strict actions are being taken by government against management of
organisation. Government of United State have specified that data of individuals
is secured.
Conclusion
From the above, it can be concluded that it is crucial for organisations to emphasise on
corporate governance when they are executing their operations. This will aid within management
of tasks and activities in an adequate manner which will enable organisations functioning in an
effectual way. Along with this, there are different stakeholders (local communities, employees,
government and shareholders) of firm which have to be regarded while management of
operations of business.
Recommendations
By analysing this report, it is recommended that corporate governance must be
adequately followed in firm for sustaining in marketplace for longer time frame. In addition to
this stakeholders must be managed in an appropriate manner by firm in order o ensure that firm
functions in an effectual way. For successful business, it is mandatory to handle operations of
business in an effective way.

References
Books and Journals
Aggarwal, R., Schloetzer, J.D. and Williamson, R., 2019. Do corporate governance mandates
impact long-term firm value and governance culture?. Journal of Corporate Finance, 59,
pp.202-217.
Aguilera, R.V., Marano, V. and Haxhi, I., 2019. International corporate governance: A review
and opportunities for future research. Journal of International Business Studies, pp.1-42.
Arnold, D. G., Beauchamp, T.L. and Bowie, N. E., 2019. Ethical theory and business.
Cambridge University Press.
Black, B.S. and et. al, 2019. Which aspects of corporate governance do and do not matter in
emerging markets. Northwestern Law & Econ Research Paper, (14-22).
Collier, J., 2018. Globalization and ethical global business. In Business Ethics and Strategy,
Volumes I and II (pp. 215-219). Routledge.
Crane, A., and et. al., 2019. Business ethics: Managing corporate citizenship and sustainability
in the age of globalization. Oxford University Press, USA.
Crifo, P., Escrig-Olmedo, E. and Mottis, N., 2019. Corporate governance as a key driver of
corporate sustainability in France: The role of board members and investor
relations. Journal of Business Ethics, 159(4), pp.1127-1146.
Daniels, R. J. and Morck, R., 2019. Corporate Decision Making in Canada. Routledge.
David, M. and James, W., 2019. Business ethics. HAL.
Jacoby, S. M., 2018. The embedded corporation: Corporate governance and employment
relations in Japan and the United States. Princeton University Press.