Suppose you are the CFO of a listed company.
The shareholders, creditors, analysts and other stakeholders are awaiting the announcement of your
company full-year financial results at the end of the month.
The market consensus is your company's earnings to be $2 per share.
However, you know that the earnings per share should be $1.50.
The CEO has pressured you to shore up the earnings per share to at least $2. He has suggested various unethical ways to increase the earnings before the announcement of the full-year results.
Question 1: Perform a stakeholder analysis and discuss how the various stakeholders would be affected if the CFO and CEO manipulated the earnings.
The actual earnings per share of the company is $1.5. However, CEO of the company wants the earnings per share to be $2 in order to meet the market expectations. He wants to show the earnings per share of $ 2 by making adjustments in the financial statements by overstating the income or by postponing the record of expenses. It is incorrect to show the false picture to shareholders, creditors, Government, income tax ...
The solution examines ethics and stakeholders analysis as a CFO of a company.