Blinded
Occurs when the ethical aspects of a decision disappear from view
Ethical Fading
When a company is managing its earnings, it is most likely following this ethical theory
Egoism
companies artificially inflate (or deflate) their revenues or profits, or earnings per share figures
earnings management
She tried to alert Ken Lay about the accounting scandal at Enron
Sherry Watkins
Occurs when subordinates follow the example of an unethical leader and also engage in unethical conduct
Social Learning
An employee who experience disagreement/discomfort with the appropriateness their company's aggressive accounting measures, and is questioning the company's ethics is experiencing
ethical dissonance
Recognition of income before the title transfers to the buyer, and holding the inventory in the seller’s warehouse.
Bill and Hold
A company, either voluntarily or under prompting by its auditors or regulators, revises its public financial information that was previously reported
A restatement
She gave into pressure from her boss at WorldCom believing it was a small request
Betty Vincent
Its purpose was investigate the extent to which social pressure from a majority group could affect a person to conform
Asch Conformity experiment
The SEC's position on the legality of companies communicating with investors on social media
it is legal as long companies inform investors which outlets they intend to use
magnitude of accounting information omission or misstatement that, in the light of surrounding circumstances, makes it probable the judgment of a reasonable person relying on the information would have been changed or influenced by the omission or misstatement
materiality
He said "I feel that what happened ... is a good example of the breakdown between the individual and corporate ethics"
McCoy's friend Stephen
When one's actions are inconsistent with their stated beliefs and values
Using accrual of operating expenses and future adjustments to manage earnings is a common method to do this.
A common method to smooth income over time
A technique that encourages customers to buy products under favorable terms and allowing the customer to return or even not pick up goods sold, without a corresponding reserve
Channel Stuffing
Selling items with the promise to buy the items back, usually on credit, so there is no economic benefit.
round trip transaction
The SEC's complaint in its case against Allergan included this charge against the company
Used non-GAAP measures to meet EPS estimates
When people keep a running mental scoreboard where they compare their self-image as a good person with what they actually do
moral equilibrium
This person linked management to an excessive zeal to project smoother earnings from year to year that casts a pall over the quality of the underlying numbers
Arthur Levitt
Overstating or understating allowances and reversing amounts in the future to smooth out net income over time
"cookie jar" reserves
The Monsanto case centered around this earnings management technique
Improperly accounting for rebates