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Martha Stewart’s Loss Reputation Essay

Martha Stewart is a well-known and respected woman who represents the successful women that made it on their own in today’s society. Not only is she a stock broker, but her fashion, style, good taste, TV show and her line of house wares is what got her the popular publicity among many. When allegations against Martha Stewart surfaced many questioned her ethical actions. Due to allegations her profit reduces and the MSO dropped.

Martha Stewart’s main target consisted of women who were attracted by her charisma. Let’s face it Martha was good at what she did, and women wanted to be like her by purchasing her products. Martha’s customers trusted her products and believed in its purpose. When the accusations rose against Martha, many started to question her ethical actions and wondered if they knew the real Martha and what she stood for. As days passed Martha continued to take the highlight of top new, at the same time her revenue reduced tremendously. As the profits went down, investors were getting ready to pay less and less for the shares of MSO.

After doing some research on MSO financial statement I realized that MSO revenue has rapidly increasing before her reputation was harmed. In 1999 MSO total revenue was $232,314 and in 2001 it was $295,627. You can defiantly see the increase in the numbers. Even though the economy and MSO competition I would assume that the revenue would keep on rising if Martha’s reputation weren’t harmed. According to MSO financial statements, even though the MSO total revenue dropped to $212,433 in 2005, but by 2007 it was already up to $327,890. Based on total revenue predictions I would assume that the same would happen with the stock price. If Martha’s reputation was not harmed the stock price would have kept on increasing.

Regardless of legal actions, in my view Martha was ethically wrong. When the allegations first rose if Martha was innocent she should of came forward and defended herself. At the same time complying with police investigation would of helped with her reputation. To a person like Martha Stewart $45,673 would not have been a good motivation to break the law and most importantly damage her reputation. If she didn’t do anything wrong she could of donated that money to charity, which will show her well intentions. Martha also could of made a donation to a local community at need.

Insider training is not only illegal but it’s also unethical. Everyone deserves a chance at fair opportunity to make investment decisions. Regardless of Martha Stewart’s actions I still believe she was unethical and her actions is what caused harm to her reputation.

Texaco: The Ecuador Issue

“Around 1964 Texaco Inc. started operating through a subsidiary company TexPet in the Amazon region of Ecuador” (Brooks & Dunn, 2010). TexPet was a minor owner of the project and its partner was Petroecudar. Petroecuador is a government owned oil company. Overtime thanks to TexPet’s operations Ecuador greatly benefited, however at the time no one saw the bigger picture and long-time damages.

Not only did Ecuador receive “approximately 98 percent of all money generated” (Brooks & Dunn, 2010), but it also helped the economy by providing more then 2,800 job positions. At this time it looks like Texaco was ethically wrong. They were doing their business, which they were very successful at. At the same time they are able to help out country at need. For the short-term everyone seemed to be perfectly okay with Texaco doing oil business in Ecuador. But then what happened?

Even though Texaco has pulled out of the consortium in 1992, three big lawsuits were filed against them. By 1998, the $40 million remediation project was completed, which included clear lands were replaced, contaminated soil was remediated, and producing water systems were modified. This right here shows that Texaco had some kind of moral and ethical consideration towards their actions. “In 1994, a cancer study released by the Centre for Economic and Social Rights in New York confirmed the health problems in the region” (Gillis, 2011). After reading this article written by Gills, I would say that Texaco was ethically wrong for what they did, and Ecuador had every right to sue them in United States.

There had to be some kind of truth behind Texaco knowing what the possible negative effects were going to be, and someone has to stop the companies from unethical behavior. In situation where oil spills were caused by natural disaster the company should not be held liable. If there was a documented earthquake and Texaco could prove that the oil spill damages were cause by the earthquake then they should not be held responsible. Every company should have procedures in place to prevent from oil spills in case of natural disaster and try to control the action as much as possible.

They way there is always a plan A, B and C in place. While the three lawsuits had significant points, I must say that Texaco’s argument showed evidence of concern. After all they did spend $40 million on remediation project. This act shows that they were concerned about the outcome of their actions. But was it already late for their generosity? Their actions did not match their concerns at all, which makes my point more valid that they acted unethically.

Where Were the Accountants?

Norm, is a graduate student who is about to apply to an accounting firm for a job when he notices few issues that are bugging him. After applying what he has learned and the rules and regulations of GAAP, Norm came to conclusion that the actions taken were unethical and wrong. Considering that he is second guessing himself about becoming a professional accountant I would remind him what he has learned, what his beliefs are, and what the rules and regulations were of GAAP. First of all I would make sure to point out to Norm that he is a great accountant already for noticing those issues. Maybe those mistakes were made on purpose but maybe they were done by error with a poor judgment. Norm’s knowledge is fresh and he has so much to offer to every accounting firm that they would be lucky to have him. Next to his
brilliance are his morals, which I would remind him of.

The fact that he notices something wrong in those articles is big. But what is even bigger is that he is willing to do something about it. Trust is very big when it coms to accountants and its clients. Norm needs to keep in mind that he needs to establish a relationship based on trust with his future clients. Last but not least I would remind Norm that the best he can do is at all the time follow the rules and regulations of GAAP. If he sticks to the rules and regulations he will not have to worry about being in same position as those articles were.

Anyone can do the job, but not everyone can do the job the right way. With that being said I would remind Norm of all the curses we took together and how we aced on all of them. Norm doesn’t need any help on figuring out what to do with his career. What he needs is a gentle reminder of what he knows and where his ethical stand is. As someone who went to school with Norm, I would make sure to tell him that I believe he would be a good accountant.

Reference
Brooks, L., & Dunn, P. (2010). Business &professional ethics for directors, executives & accountants. (5th ed.). Mason, OH: South-Western.

Form 10-k: Martha stewart living omnimedia inc-mso. (2008, March 17). Retrieved from http://library.corporate-ir.net/library/96/960/96022/items/284892/10-K_as_Annual-Report.pdf

Gillis, C. (2011, April 27). Ecuador vs. chevron-texaco: A brief history. Retrieved from http://www.counterspill.org/article/ecuador-vs-chevron-texaco-brief-history


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