Landon Company operates in a state where corporate taxes and workmen's compensation insurance rates have recently doubled. Landon's president has assigned you the task of preparing an economic analysis and making a recommendation about whether to move the company's entire operation to Missouri. The president is slightly in favor of such a move because Missouri is his boyhood home, and he also owns a fishing lodge there. (Kimmel 1227)
You have just completed building your dream house, moved in, and sodded the lawn. Your children are all doing well in school and sports and, along with your spouse, want no part of a move to Missouri. If the company does move, so will you because your town is a one-industry community, and you and your spouse will have to move to have employment. Moving when everyone else does will cause you to take a big loss on the sale of your house. The same hardships will be suffered by your coworkers, and the town will be devastated. (Kimmel 1227)
In compiling the costs of moving versus not moving, you have latitude in the assumptions you make, the estimates you compute, and the discount rates and time periods you project. You are in a position to influence the decision singlehandedly. (Kimmel 1227)
(1) Who are the stakeholders in this situation?
(2) What are the ethical issues in this situation?
(3) What would you do in this situation? (Kimmel 1227-1228)
Kimmel, Paul D. Accounting: Tools for Business Decision Making, 4th Edition. John Wiley & Sons, 07/2011. VitalBook file.
What is your opinion on this ethics case.
The stakeholders in this decision are many: the employees, citizens of the town, family members, shareholders, management and consumers. In making this decision, looking at purely economic advantages for the company may result in a different conclusion than looking at the total cost of the decision for a "one industry" town. Clearly, a move to Missouri will greatly impact Landon employees and their families. In addition, the move will impact all the businesses and their employees who depend upon Landon employees in their current location: the schoolteachers, sport coaches, bank tellers, supermarket and gas station employees, for instance. And ...
This detailed solution offers help for a case study in Kimmel, Weygandt, & Kieso (2011) book about the ethics involved in preparing an accurate accounting summary for moving a company to a new state.