In the case of McSparran v. Larson, it can be observed that the actions of management of the corpotaion have led to high legal fees and damage of the reputation of the company. This is caused by the unacceptable behaviors of the management of the company. In addition to these two, the actions of the board have caused greater damages to the corporation.
In the first place, the financiers of the corporation have lost trust in the corporation. Therefore, it will be difficult for the financiers to offer any financial assistance to the corporation since there is a probability that the corporation will fake accounting records for the sake of getting the financial assistance. This would be risky for the financial institutions (Halbert, 24). This therefore means that the corporation will face difficulties in case it wishes to invest since it will be difficult to obtain the necessary funds.
Since the public have known the actions of the board of directors, the demand for the company’s shares will decrease to a large extent and therefore their value is likely to decrease to a large extent. This will be a great loss to the shareholders who have invested their funds in the company. Since the wealth of the shareholder is greatly affected, then this is a harm to the corporation in general.
Generally, the actions of the management in this case have caused a great harm to the corporation. False accounting records are an unacceptable behavior in accounting since it causes conflicts with the shareholders and other public members. It harms the wealth of the shareholders and makes the investment of the corporation difficult in future despite of having legal consequences.
Work cited.
Halbert, Terry, and Elaine Ingulli. Law & Ethics in the Business Environment. Mason, OH: South-Western Cengage Learning, 2009. Print.
