Reporting negative performance : when is silence gold?

Document Type

Journal article

Source Publication

Journal of Financial Education

Publication Date

Fall 2016

Volume

42

Issue

1-2

First Page

176

Last Page

185

Publisher

Financial Education Association

Keywords

Cements, Warnings, Profit margins, Net profits, Financial margins, Fees, Financial management, Gross profits, Gross margins, Selling price

Abstract

This case illustrates a real-life situation concerning an ethical dilemma that a management accountant faces when analyzing deteriorating financial statements. The management accountant has to balance the interests of the employer company, the investment bank, and the investors while facing undue pressure from senior management, regulator, and the media. By reading the story of Tim Chan, who was asked to prepare an operating and financial analysis of a company for listing on the stock exchange, the reader will observe how a management accountant assured senior management of a strong financial position and outlook but later acted expediently and disclosed selective negative information to satisfy the regulator. However, Tim’s action stirred up resentment and intimidation by senior management, thereby forcing him to reluctantly hide more gloomy information. Worse still, that information subsequently surfaced, and Tim suggested another temporary expedient act to alleviate any possible adverse effect on the company’s stock performance.

Print ISSN

00933961

E-ISSN

2332421X

Publisher Statement

Copyright © 2016 by the Journal of Financial Education. Access to external full text or publisher's version may require subscription.

Full-text Version

Publisher’s Version

Language

English

Recommended Citation

Shum, C., Lui, G., & Chung, A. (2016). Reporting negative performance: When is silence gold? Journal of Financial Education, 42(1-2), 176-185. Retrieved from http://www.jstor.org/stable/90000842

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