Business Ethics Case Studies: Martha Stewart, Texaco, and Accountants

This document presents three case studies focusing on business ethics. The first case examines Martha Stewart's insider trading scandal and its impact on her reputation. The second case explores Texaco's environmental contamination issues in Ecuador and the subsequent legal battles. The third case delves into the ethical responsibilities of accountants, raising questions about their role in preventing financial misconduct and ensuring corporate accountability. Each case study provides an introduction, context, and conclusion, offering a comprehensive overview of the ethical challenges and implications involved.

Ethics
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Table of Contents
Martha Stewart’s Lost Reputation.........................................................................................................3
Introduction.......................................................................................................................................3
Main context.....................................................................................................................................3
Conclusion.........................................................................................................................................3
Texaco: The Ecuador Issue.....................................................................................................................4
Introduction.......................................................................................................................................4
Main context.....................................................................................................................................4
Conclusion.........................................................................................................................................4
Where Were the Accountants...............................................................................................................5
Introduction.......................................................................................................................................5
Main Context.....................................................................................................................................5
Conclusion.........................................................................................................................................5
References.............................................................................................................................................6
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Martha Stewart’s Lost Reputation
Introduction
The case of Stewart was in the headline for years. As per the TV programs Martha Stewart
has an impressive business that was being promoted by her magazines and website. After the
personal misconduct of Stewart, her business was at risk. There was an allegation of insider
trading that took Martha Stewart to imprisonment. Her image and reputation were in trouble
because of the investigation for insider trading scandal. It is important to understand how she
managed to maintain the reputation of the company under these circumstances (Webre,
2012).
Main context
3,928 shares of ImClone were sold for US$228,000 just before the day when the approval of
Erbitux was rejected by the U.S. Food and Drug Administration. Stewart had received more
US$45,000 after selling the shares before rejection of the DEA. It was being denied from
Stewart that she had any advance knowledge from the CEO of the company regarding the
decision of Erbitux. But as per the SEC allegations, Sam had disclosed the information to his
family so the share of ImClone could be dumped on the public before the official
announcement of the rejection.
Conclusion
On March 5, 2004, Stewart was charged for securities fraud and for putting obstacles in
justice regarding the sale of stock of ImClone. The charge for security fraud was dismissed
by the judge as prosecutors did not have enough proof. However, the charge for obstruction
of justice remained and she had to serve five months prison.
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Texaco: The Ecuador Issue
Introduction
The citizens on Ecuadorian had filed a case in US federal court against Texaco in 1993.
Again in 1994 the citizens of Peruvian also filed a lawsuit against Texaco for polluting the
rainforest and river of Ecuador and Peru. The oil operations of Texaco had been damaging
the environment and the health of the people who were living in the region. However, both
the cases were discharged (Dong, 2013).
Main context
The allegation was environmental contamination on the land where the business was being
operated by Texaco. It was alleged that this contamination had become the reason for cancer
and other health problems in the region. Texaco was asked by the Ecuadorian judge to pay
$8.6 billion for the damages and clean up the cost (Emerson, 2016). It was claimed by
Texaco that the judgment was achieved through bribery and fraud and also filed an
international arbitration claim against the Government of Ecuador in 2009. Ecuador was held
liable for denying justice and Chevron is not liable to pay $9.5 billion as the company’s
fundamental procedural rights are not violated.
Conclusion
Ecuadorians were able to sue Texaco when the case was firstly filed in the United States
because $800 million compensation was being demanded by the indigenous communities as
compensation for the damages. Later, Texaco mentioned that Ecuador does not have any
scientific evidence to prove that the company's fundamental procedural rights are violated.
Where Were the Accountants
Introduction
Sam wanted to be an accountant and he is just about to apply for an accountant job in a firm.
But he went through some articles which made him confused whether he really wanted to be
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an accountant. He had believed that accountants have skills of measuring and disclosure
(Kretzschmar, 2014).
Main Context
Sam found some ethical issues in a newspaper article. In the first article, he found that the
increasing rates of interest and fixed landing rates were resulting in adverse cash flow and
also reducing the value underlying S & L Loan assets. He found seven accounting problems
and practice that was not being improved to change the outcome. In the second article, he
noticed that in next 20 years, matter abuse will be costing Medicare $20 billion hospital costs
alone (Shaw, 2017). Trust fund realized a statement stating that the fund would run out of
money in 7 years. Sam expressed that we should not wait for the economist to make these
calculations, accountants have the capability of making them.
Conclusion
Sam has raised a very important question “Where were the accountants. There are many
sectors where accountants can work very efficiently and can prove themselves like in second
article accountants can also work in making those calculations and it will also be beneficial to
the society. Accountants also require maintaining their dignity and should work ethically so
that the people like Sam do not feel bad in becoming an accountant. In the third article,
auditors are doing fraud which made a negative impact on Sam. Finally, we can help Sam by
helping accountants and accountants also require helping themselves.
References
Dong, L. (2013). Texaco: The Ecuador Issue. Retrieved from
https://prezi.com/aqumq8uybdpo/texaco-the-ecuador-issue/
Emerson, R. (2016). Business law (6th ed.). [Place of publication not identified]:
Barrons Educational Series.
Kretzschmar, L. (2014). Ethics for accountants and auditors (3rd ed.). Cape Town:
Oxford University Press Southern Africa.
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Shaw, W. (2017). Business ethics (4th ed.). Boston, MA: Cengage Learning.
Webre, J. (2012). Martha Stewart's Lost Reputation. Retrieved from
https://prezi.com/sbchqhtaux8i/martha-stewarts-lost-reputation/
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