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The Rise and Fall of Tyco Inc

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The Rise and Fall of Tyco Inc

During the leadership of Denis Kozlowski, Tyco Company was growing and expanding rapidly, the company's revenues grew up to 12.9 times (from $3.1 billion to almost $40 billion). When I examined some statistics on the Tyco's acquisition between 1990 (when Mr. Kozlowski became the CEO of Tyco) and 2002 (when Dennis Kozlowski was forced to leave his work place), I saw a surprising and rapid progression of the number of the acquisitions made by Tyco. For example, in 1997 the number of acquisitions reached its' record number of 21 companies. In my opinion, Dennis Kozlowski did not intend to develop Tyco as company and make it the leading and most profitable firm in a particular business field, his only intend was to show the highest possible profits and stock price using 'accounting tricks' and acquisition strategy. He chose the acquisition strategy because it was a fast way to increase the company's assets on the balance sheet and thus make the outsiders believe that the company has a lot of liquid (cash) assets to purchase all the acquired companies. Moreover, this acquisition strategy helped Kozlowski and Swartz to hide all their accounting fraud manipulations of the company's books and earnings because of such a big company's size. The acquisition strategy did not truly benefit Tyco because the company became a mixture of diverse and unrelated businesses, and the company's real debt commitments exceeded $23 billion which made the company's debt ratio way too high. Dennis Kozlowski was a big beneficiary of the above acquisition strategy: not only was he called a great manager who enhanced the value of the company's assets and increased the company's stock price, but he was also using the company as his own personal treasury and made it pay all his personal expenses.

I believe that the top managers could be engaged in the above mentioned accounting manipulations and fraud because of the lack of ethical and moral norms and the convictions that the top managers are socially responsible for the company's image and the wellbeing of the company's employees and stakeholders. I personally believe that the top managers who are engaged in fraud and falsification of the company's financial statements still stay on the pre-conventional level of reasoning rather than on conventional level when a person thinks whether his or her decisions are right, ethical, and moral. The Tyco's former CEO securities fraud and grand larceny is an example of such lack ethical norms and the personal responsibility to the company's stakeholders.

The things that motivated the Tyco's top management to engage in fraudulent and unethical behavior were personal greed and ambitions. Most likely, on the pre-conventional level of reasoning Mr. Kozlowski and Mr. Swart were thinking about the possible outcomes of their



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