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Tyco Case Study

Essay by   •  November 3, 2011  •  Essay  •  430 Words (2 Pages)  •  9,257 Views

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Tyco Case Study

Tyco's issues stems from the fact that the top executives CEOs, CFOs and members of the board of directors had no direct oversight allowing them to broker deals make loans, forgive loans and no one check and make that what was happening was legal or not. CEO Dennis Kozlowski and CFO Mark Swartz failed to disclose millions of dollars of low interest and interest-free loans they received from Tyco. The executives' unethical behavior ultimately resulted in shareholders benefits being written off and the company going in massive debt.

Evaluating the character of management employees before hiring them is very important reputations are a lot different than character, most top level executives are hired reputations but character tells people what you are really like. The issues at Tyco were caused by the greed for power and money. Just think if Dennis Kozlowski would have just paid the taxes on the painting how much longer would this have gone on before he was caught. Many companies have guides for ethical conduct but what good is it if there are no checks or balances put in place to have the leadership that's responsible these values adhere to them.

1. What do you think Kozlowski motivation for trying to avoid sales taxes on his art purchases was.

(A) I think it's obvious it was about the money he did not want to pay millions in taxes just like moving the headquarters to another state to pay fewer taxes. In just about every corporate ethics case greed for power and money is the primary reason because it is never, oh I didn't know it was wrong.

2. Explain the concept of commingling assets with respect to the Tyco case

(A) First we have to understand what commingling is and is the act of mixing the funds belonging to one party with those of another party, especially when one party has responsibility to keep the funds separate for the other party. Tyco used this as a way to go around the system for its on personal gains it was a way to hide the true intentions of its executives.

3. Would it have been possible for the board of directors to see the adjustments taking place in the different programs at Tyco?

(A) I think the board could have seen all of the adjustments if they had a separate governess for each area someone to make sure all the checks and balances are met. There has to be and dis-interested party to make sure everything is done in accordance with the rules and regulations.

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