The Rise of the Rogue Executivve

rre The Rise of the Rogue Executive: How Good Companies Go Bad and How to Stop the Destruction is a hard-hitting book by Professors Leonard Sayles and Cyndia Smith. The book takes a strong stand against the lack of ethics in contemporary American businesses.  It describes, in great detail, the ethical lapses committed by American businesses in the last few years. The authors’ case is that the rogue executive is not an exception at the upper, or lower, echleons of American business, and many sections of our society must accept responsibility in the prevalence of white collar crime. The authors’ critique the role of business schools, press and journalists, investors, regulators, Congress and governments, auditors and consultants, and the larger public in supporting and encouraging unethical business practices. The book concludes with a discussion of how the authors believe things can be fixed and changed.

The book was written long before many of the unethical business practices that occupy the front pages of our newspapers today occured: Bernie Madoff’s largest Ponzie scheme, the fall of Satyam founder Ramalingam Raju. Messers Sayles and Smith provide an in-depth examination of some of the things that are wrong with American businesses today, and many of the issues they discuss apply equally well to businesses in many developed and emerging economies  that are imitating (or at least trying to imitate) American capitalism. The one major shortcoming of the book is repetitiveness- Examples are repeated in different places in the book and parts of the book seem very similar to other parts. Despite such drawbacks, the book is a must read for anyone interested in understanding and improving business ethics.



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29 responses to “The Rise of the Rogue Executivve

  1. Abraham Mizrahi

    The first few chapters of the The Rise of the Rogue Executive highlight three contributing issues regarding the downturn of American businesses: changes in the executive outlook, changes in investor expectations, and accounting problems.
    Over the years the executive outlook for their firms has changed from being a long term strategic outlook to a short term financial goal. Much of this has to do with their compensation being aligned with their company’s stock price. Instead of engaging in long term value adding activities, they rely heavily on things like mergers and acquisitions that change earnings in the short run and have a major effect on stock prices.
    Investor expectations and preferences have vastly changed as well. They too have changed from a long term to a short term outlook. Pension funds, mutual funds, and individual investors have taken most of their money out of long term fixed income securities and placed it into short term and extremely risky stock portfolios. The amount of day traders has also vastly increased over the years.
    Another major problem is America’s accounting standards. Many of the practices used by accountants to inflate or deflate earnings are apparently perfectly legal under our current accounting standards. Only after a serious violations like Enron and Worldcom does stricter regulation come out. The system has become more reactive than proactive.

  2. Tal Schorr

    The Rise of the Rogue Executive commences with an early sense of what are the contributing factors of deception of head executives. The burden has apparently been put on them to develop the earnings of the company in terms of returns and stock price. However this runs in misalignment with their supposed main objective of long term success.
    It has become apparent that stock price is the judgment of success of the CEO. By getting the stock price higher they earn the potential of higher bonuses. These executives therefore, in their own benefit, have seen it crucial to alter quarterly earnings to align with expected earning from the “streets” and with the accounting principles as lax as they are, loopholes are the means to the end. Even if they fail and are asked to depart, they are rewarded with preposterous severance
    Investor’s perspectives on the matter have changed as well. Their thirst for fast money has even laid more of a burden on executives to land sudden success. They may even quit their jobs to trade all day.
    It has been attempted to align company goals with those of the executives by offering option packages. This has failed as well with the abuse of this privilege as in the Enron case.

  3. Mitchell Ostrow

    The Rise of the Rogue Executive begins by discussing several of the problems with corporate America. Top executives have become greedy, demanding excessive compensation. Top management often earns 1,000 times the average workers pay versus only 50 to 100 times not long ago.
    In addition, there has been a major shift from an emphasis on the long term to the short term profitability within major corporations. That coupled with investor impatience has led to the manipulation of corporations financial statements. Many people have been impacted by this as several people became active traders, hoping to make a quick profit.
    The accounting standards used have also not been stringent enough. Many corporations practiced reverse accounting. Reverse accounting is adapting a company’s accounting to meet or exceed “The Street” expectations for next quarter’s earnings. A number of these actions did not violate the standards of acceptable accounting. Even as more strict standards have come out with the passage of the Sarbanes-Oxley Act, business groups have continued to fight against them.

  4. Stephanie Crandall

    The Rise of the Rogue Executive begins by discussing where CEO’s have ethically gone wrong in recent years. They discuss some of the famous cases of fraud, such as Enron. When the question of how something as big as the Enron case could go unnoticed for so long as it had, the answer was simply that everyone else was in on the act as well. Not only is there an issue over fraudelant accounting practices, but top manangement greed has led to an outrageous increase in compensation while regular worker salaries have seen only a small increase. Severance packages have also seen a sharp increase as well. Severance payments in the millions are given to CEO’s who are at the top of a company for a short period of time and who perform poorly. One of the reasons given for poor performance is the decline in personal responsibilty in a company. Also, there is the issue of impatient investors. Top management is no longer focusing on the long term welfare of a company, but are rather only looking to the short term. Too much attention is being put to the company share price as investors are now looking for quick profits instead of long term gains.

  5. Inessa Kylymar

    “The Rise of the Rogue Executive” is the book that tells the reader how executives spend companies’ money in their favor. At the beginning of the book the author talks about executives’ problems like “unconscionable pay packages and breaking the law in the bargain.” The complicated accounting system allows top management to find ways around to deceive shareholders. Because of the widespread of the Internet and more advanced hardware and software development firms could hide any information by complicated chains. Also, “The Street” plays significant role in evaluation firm and its reported earnings. If the firm missed even a penny of forecasted numbers, the results for the firm might have been devastating. So, they tried everything that could help them to make up for that number, even lie to shareholders.

  6. Abraham Mizrahi

    The Rise of the Rogue Executive continues to highlight another major downside to modern day corporations, which is information technology. As technology has become more advanced and more complex, the amount of people who actually understand exactly what they do has been decreasing. Corporate accounting has evolved from a simple reporting of a company’s activities, to an intricate, “black box” system developed through spreadsheets and what-if analysis, and as time goes on, accounting systems continue to become more complex.
    The book then speaks about Arthur Andersen and auditors in general. Andersen was taken down after the Enron scandal. One of the ways to explain Andersen’s actions can be attributed to the fact that auditing firms had begun to act like corporations. Partners in the firm had begun to emphasize short term financial goals and auditors had essentially turned into salesman, trying to bring in the most work for the firm. In response to the scandal, the government passed the Sarbanes-Oxley act. The act prohibits auditors from providing another firm with both is auditing and consulting services. It also holds CEO’s, CFO’s and boards of directors liable for their company’s financial reporting.
    Problems exist with boards of directors as well. The job of directors has shifted from being the protectors of shareholder interests, to being subservient to the CEO. Their new goal has become retaining their prestigious positions that are under-worked and highly paid.
    The book also includes journalists as part of the problem. Americans have developed a strong desire to only hear positive news about companies and journalists are eager to feed it to them. Journalists have been working hand in hand with the corporations, receiving benefits on the side. Other issues regarding journalism is the way in which companies are able to manipulate the media through their public relations departments, and the blatant conflicts of interest that exist in many of America’s media conglomerates.

  7. Stephanie Crandall

    The next section of the book begins to discuss computer technology, the Arthur Anderson case, and auditors. The phrase “black box” is used to describe the current state of computer technology because it is so hard for people to find transparency into how it works. People assume that anything derived from a computer program is concrete, but the technology has actually led to a lot of “what-iff-ing” for accountants. They are now able to punch numbers into spreadsheets and get immediate results as to the implications. This is a dangerous tool because they have the ability to easily manipulate earnings. The book then goes into detail in discussing the Arthur Anderson case. They talk about how Anderson would never have been able to recover as a firm after losing their right to public auditing because of the tremendous damage to their reputation. It also discussed Anderson’s risk management program and its Professional Standards Group and the ways in which auditors went against the PSG in the Enron case. Next, the issue of the role of the auditor was discussed. The auditor’s responsibility is to make the numbers real for the shareholders and provide them with some transparency. An issue brought up was the conflict of protecting the public interest and their client obligations. However, it is necessary to make the distinction between protecting the image of a company and covering something up for a company.

  8. Mitchell Ostrow

    The Rise of the Rogue Executive continues discussing the many problems of corporate America. Not only are the corporations problematic, but the auditors are as well. In 1992, Andersen’s Partner Purge got rid of many auditors who would stand strong on tough issues and did not just seek to appease its clients. The firm became more concerned with revenues than doing their job properly In addition, a CPA found guilty of fraud almost never would have their license revoked. At most they might have their license suspended for a few years.
    The book continues discussing several other problems. Ranging from problems with directors to journalists. For many years being on the board of directors was seen as an easy job. They worked few hours and received many perks. Many boards have not questioned CEO’s on important matters. They did not want to put their position at risk by asking tough questions. In addition the CEO is often the chairman of the board which creates governance problems. Regarding journalism, the repeal of the Fairness Doctrine by the FCC in 1985 has allowed journalists to only show one side of a story, and essentially spread propaganda.

    Its hard to believe the the CEO of a company has been able to sit as the chairman of the board of directors. It clearly creates a conflict for the directors who are supposed to be critical of the CEO and the company.

  9. Stephanie Crandall

    The Rise of the Rogue Executive provided many explanations for the wrong doings of companies and individuals. The book itself was pretty biased; something that would probably be expected given the theme of the book. I also found the book to be extremely repetitive. The same examples were used repeatedly throughout the entire book. I wish the authors would have provided more diverse examples to prove their points. The book described how it is not just the CEO’s to blame, but that there are many others as well that need to be considered. Some that they discussed were the auditors, boards of directors, journalists, and academics. Something that I found interesting was the dicussion of ethics courses at universities. The book states that many business programs don’t require students to take any ethics courses but that they expect students to already have a moral mindset by the time they enter college. I think that social reponsibility is more than just knowing right from wrong, but that it is important to learn in business school. It should not be assumed that young students understand it already.

  10. Abraham Mizrahi

    The author’s continue their attack by placing blame on academia as well. Professors don’t want to waste their time speaking about ethics, and many of them preach an extreme viewpoint of free trade fundamentalism. Many professors also use their positions to make considerable amounts of money as consultants. The next category on the author’s blame list are consultants. The consulting industry is based on fees and consulting firms have become masters at extracting fees from their clients. However it is very common for them to oversell services that they can not necessarily provide.
    One of the major shifts from the robber barrons of the past to today’s top executives is in their mentality. In the past we saw things like collusion to set prices, but now a major threat comes from executives bleeding their own companies dry. Another major flaw in today’s mentality is the idea that a “mythic CEO” alone can transform an entire organization. By elevating them in our minds to such heights, they begin to feel like they’ve earned their excessive compensation, immense stock options, and massive severance payments.
    At the conclusion, the author suggests that we need to reevaluate our view of the business world. Corporate profits do not necessarily increase every year, there needs to be more insight into complex financial engineering, and we need to enhance our accounting practices and standards. With regards to CEO’s and leaders who take the job for its large compensation package are typically not capable of performing to the proper lever. The true leader is one who doesn’t do it for the money, but rather as a way of challenging himself and takes personal gratification in the fulfillment of the overall goals and strategies of the firm.

  11. Mitchell Ostrow

    The Rise of the Rogue Executive continues its critique of corporate America. Not only does it continue its critique of the executives and auditors, but begins its critique of other groups as well. The authors critique the board of directors, journalists, and academia. The authors establish the fact that directors have become too passive, and see their job as an easy way to make money during their retirement. Rarely do they challenge a CEO’s decision, and fear losing their position. Journalists soon became corrupt , being paid to promote particular companies or make an executive look good. In addition, the authors critique that professors do not stress ethics enough in their courses.
    The author concludes the novel stating that the overall American business society as a whole can do better. Corporate executives need to revert back to the basics, and run their companies for the long term rather than focusing on short term analysts estimates. This country needs executives who will look to the future and stay the course. When these leaders emerge, America will be able to continue to be a beacon to the world.

  12. Jenna Ward

    The first couple chapters of “The Rise of the Rogue Executive” gives us a brief history of US business. The author looks at the past and brings it to the present, which helps us to understand where we are today. In the 1990s the world was jealous of American free enterprise and many wanted to copy it. We were so proud of what we had accomplished, and that the world envied us. Pride may have been what has caused our ethical destruction.

    The author suggests that part of the problem is that executives make a big profit. Even though there are news stories of corruption within business, senior executive compensation is still rising. One of the most interesting things that I read within these chapters so far was that CFO would privately talk to the SEC with regards to enforcing rules. CFOs would go talk to the SEC so that they would be able to resist orders from the CEOs (whom we could assume were trying to bend the rules). However, the SEC didn’t do anything until it was too late.

    One of the questions to ask based on the reading so far is, should executives have such a generous salary, and bonus package? Money is an easy way to get caught up with greed. With greed can come unethical behavior. We need to take a better look at the business world and these executive leaders. These are the people who are supposed to be leading an business honestly and into the future. We need to evaluate compensation packages, and if these are the root causes of unethical behavior in business today.

  13. Lindsay Jean Stradley

    The Rise of the Rogue Executive takes a look at the business world in America, as it makes its jouney from the 1990s when it prospered and was looked upon as a model to follow, to our present sistuation where companies are caught up in scandals and unethical behaviors. America was onced looked at as a role model for up and coming countries and their business practices. However, with CEOs being treated and paid more celebrities their confidence became infalated, and they strived to do anything in their power to keep profits high.
    The books points out that CEOs used to me paid based on their performance, and how they furthered the success of their company. However, today CEOs are take positions with their only goal being to further their immediate bottom line with little regard to the future success of the company. This had led top executives to skew their accounting and make profits appear that aren’t really there. It seems that CEOs and top management are more concerned with getting their severance pay and high salaries, than the success of the companie, or the ethics behind their actions.
    The book poses the question of how far will American companies fall into their pit of lies and unethical behavior? When will CEOs once again be looked upon as someone who is furthering the company they are involved in and looking out for the best interest of their sharholders, not their own personal gains.

  14. The Rise of the Rogue executive in the first two chapters explains the change in values of corporations. There are a series of misaligned information, with results of adverse selection and moral hazard. Because in corporations compensations, stocks and incentives are aligned, corruption is highly prevalent. Workers get paid significantly less and CEOs are looking for their cut bonuses and benefits for returning large #s that don’t necessarily match up to the well-being of the company. Rather than focusing on the long – term ideals and mission of the corporation, people start to find that short term goals and short term increases in sales, could lead to personal benefits. The focus veers off-course and to please investors they would increase sales, stock prices, look for quick acquisitions and take on riskier but higher returned projects. Regulations on trade and accounting practices were slack. Since everyone had a common goal of getting rich-quick and were shooting for those incentives when bad deals were sealed, everyone working was essentially looking out for themselves. Accounting regulations were almost non-existent and numbers could be fudged left and right and no one would catch it since everyone was essentially doing the “wrong” thing. These first few chapters brings up the question, “Is it really the fault of top executives? Or is it the fault of the foundation of the corporation?”

  15. Jane Hamilton

    The book “The Rise of the Rouge Executive” by Sayles and Smith begins by highlighting how corporations have changed since the 1990s days of American glory. It explains that in today’s society many businesses have goals that focus solely around profit and making the company look healthy, even if that involves dishonest procedures. Many executives have brought it upon themselves to set short term goals which focus around their needs and wants. Giving bonuses and large compensation packages are examples of the manner in which many top dogs bestow wealth upon themselves, without earning it through hard work. Many have turned to unethical decisions to fuel their greed, using such examples as the Enron scandal. I feel this book is largely one sided and persuasive into the corruption of companies through their top executives and I am looking forward to getting deeper into the main problems.

  16. C.Y Dan Mou

    The Rise of the Rogue executive explains the reasons why there are tons of scandals that cause million dollars lost by companies and investors due to the selfishness of executive. The authors point out the compensation has raise 1000 times compare with the old days but the higher bonus and salary doesn’t lead to better corporate performance. At the same time, the ethics seems to diminish.

    The authors also point out that the stakeholders take the stock price more serious than the real performance. Many CEOs therefore take the risk of fading the figures by mergers and acquisitions. But once the bubble pops, investors are the one who take the loss.

  17. Mengru Wu

    The author starts off by saying that the financial scandal of Enron and Worldcom was just the beginning of the “decade of excessive greed and arrogance.” In modern economy, where corporations are competing in the global field, Americans are losing its share of market growth, production, and prosperity free market capitalism had promised in the 1990s. In this extraordinary tough global economy, we cannot afford economic vulnerabilities and weakness. Indeed, the urgent threat faince American capitalism primarily resides in internal to the corporation. He claims that social norms, the rules of proper conduct, the distinction between right and wrong have all become ambiguous and less contrasting in American corporations nowadays. Individualism and diminished sense of personal responsibility of CEOs explains how they feel excessive sense of entitlement, and tend to put their own success and fortune ahead of company’s long term performance. Combined with investor impatience, CEOs feel the pressure to show the growth of the company every year, and sometimes by even plugging in different numbers on the accounting sheet. It is important to realize that this trait is something many corporations need to be more realistic about the seriousness of corporate misbehavior.

  18. Matthew Maggiacomo

    “The Rise of the Rouge Executive” by Sayles and Smith seems to be an interesting book so far. In today’s present TARP- friendly market, this book seemed to be a little head of the curve. The main theme that I have taken from the book is a sort of commentary on the current norms in the business/corporate America. The strife for performance numbers by executives, across the board, have led to the decay of ethical business. As an accounting major, I am interested to keep reading this book. The author’s focus with Enron, which was around the time of the release, along with concentration on accountants (especially at Arthur Andersen) makes this book appealing to me. As the perspective of CEO’s shifted more and more toward the short term, investors looking at EPS and other numbers to judge company’s health, and clear lacking in Accounting regulation have set the stage for the ‘Rise of the Rogue Executive’.

  19. Kaitlinn Johnsen

    The beginning of The Rise of the Rogue Executive highlights what is happening in the modern American business economy, and how CEO’s are undergoing unethical practices to falsify financial statements. The book takes on issues such as the violations Enron committed, the change in executive decisions, and the way people view companies as being “successful” if they have a high stock price. Companies are striving to increase their stock price, even if means inflating earnings or other illegal ways of doing so (reverse accounting). The CEO’s are striving for quarterly earnings to be high in any which way they can. With everything going on, the result from the IRS was SOX, which does not completely solve these problems, but does encourage stricter internal control. The book also touches upon journalists as part of the problem of corporate America and that they manipulate the media showing only the side of the story that they think is more fascinating to viewers. I think this book helps people reevaluate what is important in a company.

  20. Matthew Maggiacomo

    In the chapter “Black boxes and big black lies”, The Rise of the Rogue Executive talks about the ‘rise’ of some questionable business practices. Once used as a simple form of informing the public of a company’s performance, the accounting information systems put in place by the various companies have lead to an extremely hazy view of what is actually going on inside the company. As accounting had progressed over the years (pre-SOX), accountants have found ways to include various accounts into the books of a company to help bolster performance.

    This is a concept that is also used by management using computers for various analysis of performance to deceive onlookers. The guard dog of public business, the SEC, fell short on its end of the deal looking over both businesses and the firms that audit them. The book highlights some issues that the authors view as imperative to success of functional public auditing.

    These same people (upper management) that are lying and deceiving the very stockholders that elect them are the ones that are responsible to run a company to its fullest. “Directors: Why the Weak Oversight” talks about the mix of the responsibility of management but also the less the best business practices. When bonuses are merited on the numbers of a business, and one can change those numbers as one sees fit, there tends to be some un-preferred outcomes.

    I’m moving on to the next upcoming chapters that look into the role of media and academics in ‘The Rise of the Rogue Executive’.

  21. C.Y Dan Mou

    In chapter 4, Black Boxes and Big Black Lies. The author describe the accounting system is a black box, which only few people can penetrate the complexities. Executive, however, sometimes has to play around the system in order to ‘adjust’ a number (such as EPS) that stakeholder will satisfy.

    By giving the possibilities that CEOs fake their company performances by using the black box. The author states that there are still a lot of people have such a fancy ‘gold rush’ dream in their minds, that they think they have a chance to get rich in such a short time. Young people, middle age or even older one have their own perspective to enter the gold rush game. But the author once again points out these people with such rosy picture in mind nuglect the fact, there are many lost their grub stakes, claims were jumped, massive scams were run on unsespecting prosoectors and investors.

    The big lie is created by using spreadsheet and the what-iff function. The operator input the data by using the what-iff and people from financial analyst to government officials quoted these inaccurate data and run with it. However, when people realize the big lie, they tend to ignore the truth and dig even deeper into the mess.

    By having more IT forensic specialists today, many frauds are revealed and floated on to the surface of the public. CEOs learnt their lessons that there are people chasing their back no matter how hard they are hiding the evidence. Regulators, employees and investors should all step up and take a predatory stance toward new technologies.

  22. Jane Hamilton

    The book continues to highlight company flaws by discussing the current state of technology as a “Black Box”, emphasizing the transparency of its computations. The suggestion that computerized data must be solid is assumed by the general public, allowing accountants to create an opportunity to manipulate earnings. An analysis of the auditors is then described, particularly drawing attention to the Arthur Andersen case. The impact of the scandal severely damaged Arthur Andersen’s public image and reputation, questioning whether the firm would have the ability to recover.
    In general, it is the auditor’s role to provide assurance for the stakeholders in the company, providing transparency, being “ethically obliged to blow the whistle” however it seems some may be paid off or simply duped into misstating the correct reliability of the firm’s financial accounts.
    In the most recent chapter I have read, the directors are put under the spotlight, highlighting their ineffectiveness of boards and their passive behaviour. This is due to the little time applied yet large payment directors receive from their role. A suggestion is made to rethink the role of the board of directors, forcing them to take risks and adhering to their legal responsibility.

  23. Jenna Ward

    Chapters 3-8 give an overview of various ethical dilemmas within corporations. These chapters really show how many different aspects of a company can be targeted to behave unethically. It is surprising that so many unethical decisions can be made within a company, but it makes “sense” why this happens when pride and greed are at stake.

    It was surprising to read how much of an impact stock prices can have on an executive. They are able to reshape the numbers to look more appealing to the shareholders. This benefits the executives because they get stock prices and bonuses based on the stock price. It was also alarming to see how executives negatively influenced earnings per share. An example is WorldCom. Top executives would take pennies from various accounts, but they would really add up. When managers asked what was going on they were pretty much hushed.

    Another point I want to bring up from these chapters was about journalism. You do not think about journalists as ethical or unethical when it comes to corporations, but they are. Journalists report stories. Their spin on the story can make it negative or positive. In this case most journalists try to make companies seem positive. You may think why would they do this? They do this because they get perks as well. They get the news story and get money, or invited to huge parties. An example of how journalists can be unethical is with Enron. There were actually some journalists on their payroll. What is ironic was that Enron was printed to be one of the top companies to work for.

    These are just a few examples of how various areas have an ethical impact on companies. It is interesting to see how little things can really add up, and how each area influences the other. Right off the bat you wouldn’t think of some areas having such an impact on business (ex. journalism), but they do. It just shows that when there is an “unethical” company there are many factors playing into why they are that way. It would be interesting to see what would happen if one of these areas stood up against the company, and did the right thing. Would the others follow, or keep backing up the company?

  24. Jenna Ward

    The final chapters 9-14 begin to wrap up and show why we may have the corporate problems that we do. I thought it was eye opening how they talked about business schools in chapter 9. It was suggested that many schools do not require ethic or social responsibility courses. Although, BU doesn’t require a specific course in this I feel that a few of my classes have at least covered the issue. It does bring up the point though if there should be solely a class on ethics. It seems that it would be worth it because of all the corruption in corporate America.

    Another surprise within this book was when the authors talked about Jack Welch. I know in the leadership classes that I have had we often talk about Welch and all the positive change he created. However, we never talked about any unethical issues. It was surprising to me that even after he retired he was given indefinite use of a company paid, luxury apartment. He also still had use of the corporate jet.

    I also appreciated how chapter 13 discussed how to select a leader. In hiring a leader we should be suspicious of those that are looking to make a small fortune with the guaranteed bonuses, massive option grants etc. We should be wary of these people because they are more than likely thinking in the short term for their own benefit rather than the company.

    I found these chapters to bring up a lot of good points, and address issues that are relevant to unethical behavior. They also addressed positive issues in the corporate world which I appreciated as well (talking about Johnson and Johnson and how they pulled out all the Tylenol for safety reasons). They did not focus solely on the negative all the time, and put a few positives in there to show that not everyone in the system is corrupt.

  25. Jane Hamilton

    A chapter I related to in the book was “Too Silent Critics: Academe” in chapter 9. This concerns academic professors, a prominent figure in my day to day life. It is important to draw attention to possible unethical behavior in business. Teaching morals to students should be mandatory to better equip them for making decisions later in life.

    In chapter 10: Fees Galore, I recognized examples used my Auditing class for oversized legal and accounting fees. It can be seen that many companies are focused on revenues, outsourcing to solve boom-bust cycles. Enron is used as an example, as it is throughout the book, as to an extreme case of outsourcing.

    I found 12 to be an interesting chapter, highlighting that worthy CEO’s are hard to find in today’s world. Many CEO’s believe their greed is nothing more than what they deserve, rewarding their performance with large compensation packages. Power can change people, the book giving an example of Jeffrey Greenberg of Marsh & McLennan who became obsessed with the company’s share price up to the point of unethical behavior.

    From the last few chapters we find that it is important to have hard-working, dedicated leaders who have long term goals for the company, not only in it for their personal benefits. It can be seen that it will be a challenge to improve the business industry to the high standard that it should be. I feel the book addressed many important themes that must be brought to the public’s attention and adjusted to reflect an ethical manner of business.

  26. Kaitlin Johnsen

    The ending chapters try to wrap up the reasons we have so many corporate scandals, and suggest possible solutions to these problems. One specific reason the book brings up is courses in schools.; how many schools, even business schools, do no require specific courses on ethical behavior, which may influence students later decision making in the corporate world. It also ends with leadership training, and how one should be attained/chosen. Leaders should not be looking out for just themselves but for the benefit of the entire company as a whole.

  27. C.Y Dan Mou

    In the later chapters, the author started to dig deep into the proper responsibilities of the senior management and how the malfuction of each position may result as a boding of disaster. Apart from the CEO, the board of directors should not only share the glory of its title and pay but also serves as a partner of CEO. They are the one who have the ability to question or even stop the CEO from doing anything unethical or may result in damage of the company. Given the directors have no direct control of the company, they serve to protect stakeholders’ profitability, they need to be responsive on the earning but at the same time focus on the long term growth of the company rather than the short term rose by improper means in operations and financial activities.

    Other than the role of the board in the company, the author also discusses about the role of professor in the college, the press that report and investigate the company. As a professor, they should deliver the message to the students that being ethical is important to the business world today. To the company, ethics is one of the key points to retain employees and decreases the turnover, it also protects the company’s image and build the trust among the business partners and investors. Students who lack of ethics in their work will most likely end up in jail and pay a great amount of fine.

    As a newsreporter, one usually reports the information from what the company has given without detailed analyze and investigation. The inaccurate information definitely sends a wrong message to readers and investors. Being a reporter needs to be 100% neutual on their stand and be careful on what they wrote.

  28. Kaitlin Johnsen

    Finally finishing the book in its entirety, it ends with the chapter called “We Can Do Better” reiterating many of the topics the authors have previously mentioned. The authors propose the question is it culture or character? Meaning, is it society that causes the immoral behavior behind the CEO’s or businesses as a whole, or is it the morals behind these decision-making personnel. I think that is a very important question to ask, and they authors could have dug deeper into that. Their final position stands with hopefully boards and directors will learn to tell the distinction between self-centered CEO’s and those who are willing to look to the upcoming years and stay for future.

  29. Matthew Maggiacomo

    After digesting this whole book; I think that the authors played out the events that have happened in a very clear way. I think that they give a fair bias to both sides. I like how then ended the book, especially within the last 3 chapters. Chapter 12 and 13 refer to the importance of REAL leadership. This is where I think most of the real answers lie; not so much in legislation or education; Real, ethical, and powerful CEO’s must step up and do what is necessary to run an effective business. The current establishment flooded with severance payments, stock options, and off the chart compensations, seems to breed the type of CEO’s that helped lead to this disaster.
    I think one aspect that could be covered a little better in the close of the book is the call for the everyday Joe, the average investor, to learn more about what is going on. I think that it falls onto every investor, spectator, and/or adult to have a better understanding of what is really going on in the business world. I think everyone who read this book, including myself, now do have a better grasp on that exact thing. I think that there is power in the hands of the individuals to help fight that these sort of things will forever be a thing of the past.
    I enjoyed the book over all; I understand the books call for the main ‘deterrence coming from the larger business system’; but I do not think that is enough. I think it needs to occur at all levels; all at the same time. Until laws are in place, paired with culture awareness/understanding, AND the whole system being revamped, only then can this part of American enterprise be a thing of the past.

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