Corporate scandal has become a hot topic since the Author Anderson and Enron fraudulent accounting and mishandling of $63 billion in assets leading to Americas largest recorded bankruptcy in US history (Williams, 2008). The financial fraud and embezzlement from one of then five largest accounting firms in the US and the energy company that successfully hid billions of dollars of debt lead to President Bush signing of Sabanes-Oxley legislation (Williams, 2008). The act signed into law in 2002 is said to protect investors from corporations mishandling finances through fraudulent accounting practices.
TIAA-CREFF governs America's largest system for teachers retirement recorded $300 billion four times the size of Enron (TIAA-CREF On Corporate Governance, 2004). The board for teachers compensation balances the interest of shareholders, managers, and potential investors. Delivering on promises set by its directors for investors means growing investments inside a volatile economy can sometimes prove to be non- prudent. These conditions historically has lead to scandals like the example of Enron, & Author Anderson accounting firm (Williams, 2008).
Corporate governance research has provided a solution to combat a culture where corporate scandal is less likely. The key to initiating integrity beyond the board room is clear mission statement with founding ethical principles in the standard practices (TIAA-CREF On Corporate Governance, 2004). Whereas the actions of leaders combined with verbal statements reiterate the lack of tolerance for unethical behavior. Leaders are the catalyst to the cultures morale and sole responsible party for the organizational behavior.
Reference
TIAA-CREF On Corporate Governance. (2004). Corporate Board, 25(145), 1-6.
Williams, J. W. (2008). Theoretical Criminology. The lessons of Enron. 12(4). 471-499.doi: 10.1177/1362480608097153
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