ETHICS PROBLEM The SEC is trying to get companies to notify the investment community more quickly
QUESTION
ETHICS PROBLEM The SEC is trying to get companies to notify the investment community more quickly when a material change will affect their forthcoming financial results. In what sense might a financial manager be seen as more ethical if he or she follows this directive and issues a press release indicating that sales will not be as high as previously anticipated?b. Based on your analysis, briefly describe the outlook for this company over the next 6 months. Discuss its specific obligations and the funds available to meet them. What could the firm do in the case of a cash deficit? (Where could it get the money?) What should the firm do if it has a cash surplus?
ANSWER (a) Following SEC directive is legal and moral corporate responsibility. It is certainly a good etical approach to issue a press release of changing scenario. The company would be seen as investor friendly company and by maintaining good puclic image the corporate may get better profits in future
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