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Tyco and Corporate Malfeasance

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Faced with the task of rebuilding investor and public confidence in Tyco, newly-appointed Edward Breen has invited an outside group to advise him as he takes steps to restore the company's viability and reputation. Called to assist your consulting firm in this project, you have been asked to study the Tyco situation and prepare a report with the following content:

1. Kozlowski certainly misused his authority in distributing bonuses, extending loans, and misreporting material items. How do you account for this behavior?

2. Tyco's Board of Directors and senior executives had legal obligations to fulfill. How do you account for the board's failure to carry out its fiduciary duties? Why did they disregard corporate and federal reporting rules?

3. As Tyco's new CEO, Breen has to regain trust from shareholders, employees and the firm's other stakeholders. What actions should he take immediately? Within the next year? Over the long term? What resources does he have at his disposal to enhance the reputation of the firm and turn it round?

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Kozlowski certainly misused his authority in distributing bonuses, extending loans, and misreporting material items. How do you account for this behavior?

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Kozlowski certainly misused his authority in distributing bonuses, extending loans, and misreporting material items. How do you account for this behavior?

This behavior can be considered extremely unethical as well as illegal. Kozlowski's actions can said to be arising out his greed. Kozlowski engaged in such unethical and illegal practices along with other senior executives to manipulate funds for personal benefits and to support his extravagant lifestyle at the expense of shareholder's money.

2. Tyco's Board of Directors and senior executives had legal obligations to fulfill. How do you account for the board's failure to carry out its fiduciary duties? Why did they disregard corporate and federal reporting rules?

They disregarded corporate and federal reporting rules for their personal benefits and greed. The manipulation and fraud as well as non-adherence to reporting rules and guidelines were done in order to make huge personal profits ...

Solution provided by:
Sheetal Jain, PGDM
Education
  • BComm, University of Delhi
  • Post Graduate Diploma in Management (Equivalent to MBA), All India Management Association
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